Consider the Following Statements

question 42

Multiple Choice

Consider the following statements.
i. The optimal product costing system is the most accurate system.
ii. The optimal product costing system is the one that minimises the cost of poor decisions from inferior information.
iii. The optimal product costing system is the most expensive one.
Which of the statements is true?

• A) i
• B) ii
• C) iii
• D) None of the given answers

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Definitions:

Risk-averse

A description of an investor or decision-maker who prioritizes minimizing risk over achieving potentially higher gains.

Certain Payoff

A guaranteed outcome or return from an investment, where the investor has absolute certainty over the amount to be received.

Asymmetric Information

A situation in which one party in a transaction has more or superior information compared to another.

Market Failures

Situations in which the allocation of goods and services by a free market is not efficient, often leading to a net social welfare loss.