When every good or service is produced up to the point where the last unit provides a marginal benefit to society equal to the marginal cost of producing it, occurs.

For each separate case below, follow the 3-step process for adjusting the prepaid asset account at december 31. step 1: determine what the current account balance equals. step 2: determine what the current account balance should equal. step 3: record the december 31 adjusting entry to get from step 1 to step 2. assume no other adjusting entries are made during the year. a. prepaid insurance. the prepaid insurance account has a $4,700 debit balance to start the year. a re- view of insurance policies and payments shows that $900 of unexpired insurance remains at year-end. b. prepaid insurance. the prepaid insurance account has a $5,890 debit balance at the start of the year. a review of insurance policies and payments shows $1,040 of insurance has expired by year-end. c. prepaidrent. onseptember1ofthecurrentyear, thecompanyprepaid$24,000 for 2 years of rentfor facilities being occupied that day. the company debited prepaid rent and credited cash for $24,000.

The school cafeteria can make pizza for approximately $0.30 a slice. the cost of kitchen use and cafeteria staff runs about $200 per day. the pizza den nearby will deliver whole pizzas for $9.00 each. the cafeteria staff cuts the pizza into eight slices and serves them in the usual cafeteria line. with no cooking duties, the staff can be reduced by half, for a fixed cost of $75 per day. should the school cafeteria make or buy its pizzas?

Aprimary advantage of organizing economic activity within firms is thea. ability to coordinate highly complex tasks to allow for specialized division of labor. b. low administrative costs because of reduced bureaucracy. c. eradication of the principal-agent problem. d. high-powered incentive to work as salaried employees for an existing firm.