chapter 1

Question 1

occurs when money is transferred one
organization or individual to another.

Answer 1

cash flow

Question 2

represents the economic effects of an alternative in terms of money spent and received.

Answer 2

cash flow

Question 3

are those products or services
that are directly used by people to satisfy their wants.

Answer 3

Consumer goods and services

Question 4

are used to produce consumer
goods and services or other producer goods

Answer 4

Producer goods and services

Question 5

are those products or services that are required to
support human life and activities, that will purchased in
somewhat the same quantity even though the price varies
considerably.

Answer 5

Necessities

Question 6

are those products or services that are desired by
humans and will be purchased if money is available after the
required necessities have been obtained

Answer 6

Luxuries

Question 7

is the quantity of a certain commodity that is bought at
a certain price at a given place and time

Answer 7

Demand

Question 8

occurs when a decrease in selling price result in
a greater than proportionate increase in sales.

Answer 8

Elastic demand

Question 9

Inelastic demand

Answer 9

occurs when a decrease in the selling price
produces a less than proportionate increase in sales

Question 10

occurs when the mathematical
product of volume and price is constant

Answer 10

Unitary elasticity of demand

Question 11

occurs in a situation where a commodity or
service is supplied by a number of vendors and there is nothing to
prevent additional vendors entering the market.

Answer 11

Perfect competition

Question 12

is the opposite of perfect competition. exists when a unique product or service is available from
a single vendor and that vendor can prevent the entry of all others
into the market.

Answer 12

Monopoly

Question 13

exists when there are so few suppliers of a product or
service that action by one will almost inevitably result in similar
action by the others

Answer 13

Oligopoly

Question 14

is the quantity of a certain commodity that is offered for sale
at a certain price at a given place and time.

Answer 14

Supply

Question 15

Under conditions of perfect competition the price at which a given
product will be supplied and purchased is the price that will result in
the supply and the demand being equal.

Answer 15

law of supply and demand may be stated as follows:

Question 16

When the use of one of the factors of production is limited, either
in increasing cost or by absolute quantity, a point will be reached
beyong which an increase in the variable factors will result in a less
than proportionate increase in output

Answer 16

The Law of Diminishing Returns

Question 17

are those unaffected by changes in activity level over a
feasible range of operations for the capacity or capability
available.

Answer 17

Fixed costs

Question 18

are those associated with an operation that varies in
total with the quantity of output or other measures of activity
level.

Answer 18

Variable costs

Question 19

is the additional costs that
results from increasing an output of a system by one (or more) units

Answer 19

Incremental Costs or incremental revenue

Question 20

are costs that can be resasonably measured and
allocated to a specific outputor work activity.

Answer 20

Direct costs

Question 21

are costs that are difficult to allocate to a specific
output or work activity.

Answer 21

Indirect costs

Question 22

consists of plant operating costs that are not direct
labor or direct material costs

Answer 22

Overhead costs

Question 23

lannedcosts per unit of output that are
established in advanced of actual production or service delivery

Answer 23

Standard costs

Question 24

involves payment of cash.Are estimated from the
perspective established for the analysis and are the future expenses
incurred for the alternatives being analyzed.

Answer 24

Cash costs

Question 25

are costs that do not involve cash payments but rather
represent the recovery of past expenditures over a fixed period of
time.

Answer 25

Book costs

Question 26

is one that has occured in the past and has no relevance to
estimates of future costs and revenues related to an alternative
course of action

Answer 26

Sunk costs

Question 27

is incurred because of the use of limited resources,
such that the opportunity to use those resources to monetary
advantage in an alternative use is foregone. It is the cost of the best
rejected opportunity and is often hidden or implied.

Answer 27

Opportunity costs

Question 28

srefers to a summation of allthe costsrelated
to a product, structure, system, or service during its life span

Answer 28

Life cycle costs