To Determine How Much of a Good to Produce to Achieve

question 342

Multiple Choice

To determine how much of a good to produce to achieve allocative efficiency,we

• A) construct a production possibilities frontier and choose the midpoint.
• B) construct a production possibilities frontier and choose any point on it.
• C) must produce on the PPF and at the point where the marginal benefit and marginal cost of the good are equal.
• D) must produce on the PPF and at the point where the marginal benefit exceeds by any amount the marginal cost of the good.
• E) must produce on the PPF and at the point where the marginal benefit exceeds by as much as possible the marginal cost of the good.

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Definitions:

Direct Approach

A method of presentation in cash flow statements where actual cash flow information from operating activities is presented directly.

Inventory

Materials and products that a business holds for the ultimate purpose of resale.

Investment Account

An account held at a financial institution or brokerage which is used for the buying of investments such as stocks, bonds, and mutual funds.

Book Value

The net value of a company's assets minus its liabilities, as recorded on the balance sheet.