In applying the lower of cost or market rule, the floor is defined as:
a) current replacement cost
b) historical cost
c) net realizable value
d) net realizable value less a normal profit margin
Answer: d) net realizable value less a normal profit margin
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How long does it take for the rate to adjust when the Fed announces a change to its target for the federal funds rate?
A. The rate never fully adjusts because the Fed announces planned changes so frequently. B. Sometimes it adjusts before the Fed even takes any action. C. It can take several days or weeks for rates to fully adjust to announced changes from the Fed. D. The rate usually adjusts immediately after the Fed takes action to change the rate.
Using the above figure, the short-run break-even price for the perfectly competitive firm will be
A) P1. B) P2. C) P3. D) P4.