A Recently Graduated Business Student Decided to Open a Small

question 144

Multiple Choice

A recently graduated business student decided to open a small Internet café serving a variety of unusual nonalcoholic beverages from around the world.He carefully used all the pricing formulas he learned in school and set a goal to break even the first six months and make a moderate profit for the next six months,at which time he would review his pricing strategies.Within a week after opening,every seat was filled and he had to replenish his beverage orders several times.At his six-month review,he was devastated to find that despite huge sales,he had actually lost money.He realized it wasn't his "math" that was wrong; he forgot to include monthly expenses such as toilet paper,paper towels,hand soap,and trash removal fees in his calculations.These costs should have appeared as __________ in his break-even analysis.

• A)fixed costs
• B)marginal costs
• C)variable costs
• D)overhead costs
• E)sunk costs

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Definitions:

Zygotes

The initial cell formed when a sperm cell fertilizes an egg cell, representing the earliest stage of development in many organisms.

Allostasis

“Balance through adaptation.” In this model of stress processes, the central nervous system (CNS) controls multiple interacting regulatory processes so that the best balance for each specific challenge is found, rather than returning to a fixed set point.

General Adaptation Syndrome

A model that describes the body's short-term and long-term reactions to stress, developed by Hans Selye.

Set-Point Model

A theory in psychology that suggests individuals have a pre-set level of happiness or well-being, which is largely stable over time despite changes in circumstances.