Economists often remark that accounting data are purely historical and at an aggregate level and do not provide information on incremental changes. So why is it the key data source for decision control and important in decision management?
What will be an ideal response?
Accounting data are useful for measuring actual performance of managers. Because it is historical, it is not likely to be misrepresented and more likely to reflect actual performance. However, it is less useful for decision management. Accounting data are at too aggregate a level and therefore, not useful for decisions regarding incremental changes. Nevertheless, accounting data can provide a framework for forecasting future consequences of proposed decisions. Examining historical data for cause and effect relationships can help understand these relationships and therefore, help make projections about future performance.
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A) economies of scope. B) economies of scale. C) economic efficiency. D) technological efficiency.
If adverse selection exists in a market
A) the government steps in and shuts it down. B) the market is considered a "grey market." C) consumers may not participate in the market at all. D) total surplus is maximized.