The Salary Paid to the Production Manager in a Factory

question 141

Multiple Choice

The salary paid to the production manager in a factory is:

• A)a variable cost.
• B)part of prime cost.
• C)part of conversion cost.
• D)both a variable cost and a prime cost.

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Definitions:

Public Good

A good that is non-excludable and non-rivalrous, meaning individuals cannot be effectively excluded from its use, and one individual's use does not reduce availability to others.

Asymmetric Information

A situation where one party to a market transaction has much more information about a product or service than the other. The result may be an under- or overallocation of resources.

Inefficient Outcomes

Situations where resources are not allocated optimally, resulting in potential losses in economic welfare.

Allocative Efficiency

A state of resource allocation where it is impossible to make any one individual better off without making someone else worse off, often achieved when marginal cost equals marginal benefit.