If the Marginal Benefit of a Hot Dog Is Greater

question 286

Multiple Choice

If the marginal benefit of a hot dog is greater than its marginal cost,then to increase efficiency,

• A) more hot dogs should be produced.
• B) fewer hot dogs should be produced.
• C) nothing should be done if the marginal benefit is greater than the marginal cost by the maximum amount because in this case the efficient quantity of hot dogs is being produced.
• D) production should be halted.
• E) More information is needed about the price of a hot dog in order to determine if production should be increased, decreased, or not changed.

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Definitions:

Equivalent Units

A concept in cost accounting used to allocate costs to units of production in processes where the units are not yet complete, converting them into the amount of finished goods units.

Assembly Department

A section within a manufacturing process where components are joined together to form a finished product.

FIFO Method

An inventory valuation method standing for "First In, First Out," assuming that the first items purchased or produced are the first ones sold.

Equivalent Units

A term used in cost accounting to represent a quantity of production expressed in terms of fully completed units, used in calculating the cost per unit during a period.