Which of the Following Statements Is(are)true? (A)Theoretical Capacity Is the Long-Run

question 73

Multiple Choice

Which of the following statements is(are) true? (A) Theoretical capacity is the long-run expected volume based on reasonably attainable working conditions.(B) The cost of excess capacity is allocated to individual cost objects using the cost driver rate.

• A) Only A is true.
• B) Only B is true.
• C) Both A and B are true.
• D) Neither A nor B is true.

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Definitions:

Capital Goods

Long-lasting goods that are used to produce other goods or services and are not sold directly to consumers.

Law of Increasing Opportunity Costs

states that as production of one good increases, the opportunity cost of producing an additional unit of this good also increases, due to factors of production not being perfectly interchangeable.

Satisfy Wants

The process of fulfilling the desires or needs of consumers through the provision of goods and services.

Marginal Cost Curve

A graphical representation that shows how the cost of producing one additional unit of a good changes as the quantity of production is increased.