In applying the lower of cost or market rule, market may be represented by:
a) current replacement costs
b) net realizable value
c) net realizable value less a normal profit margin
d) any of the above may be correct
Answer: d) any of the above may be correct
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Suppose a competitive firm's total revenue is $1,000,000 where MR = MC, its explicit variable costs are $900,000, its fixed costs are $90,000 of which $60,000 are sunk in the short run. If its implicit opportunity costs are $50,000, the firm should
A) produce because its economic profit is positive. B) produce because its economic profit is zero. C) produce even though its economic profit is negative. D) shut down.
Which of the following is most likely to reduce the incidence of employee shirking?
a. use of the corporate business structure, rather than an individual proprietorship b. closely relating the pay of workers to their productive contribution c. payment of identical wage rates to all workers d. providing workers with a year-end bonus if the business firm loses money during the year