Annual budgeting of production goals of a division within a firm
a. is an accounting mechanism to plan for the costs and revenues over a time period
b. increase the burden on the division when goals rise
c. can lead to accumulated inventory when the goals of an upstream division are arbitrarily set too high
d. all of the above
d
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Which of the following describes a firm?
a. Purchases labor hours from workers b. Borrows capital from investors c. Combines labor and capital to create production, moving them from their low value use to high value use d. All of the above
Figure 6-2
illustrates the four possibilities of the structure of production and consumption for a good or service. When the structure of production and consumption for a good places it in quadrant B,
a.
consumers have little incentive to search out and patronize low-cost suppliers.
b.
private producers of such goods will have little incentive to operate efficiently and to keep prices low.
c.
goods and services will only be supplied if consumers are willing to pay an amount sufficient to cover their production costs.
d.
both a and b, but not c, will be true.