Exhibit 8-6 -At Output Level a in Exhibit 8-6

question 185

Multiple Choice

Exhibit 8-6
-At output level a in Exhibit 8-6

• A) a loss would be incurred
• B) positive economic profit would be earned
• C) economic profit would be zero
• D) economic profit would be smaller than at point e
• E) the firm cannot cover its fixed cost

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Definitions:

CCA Rate

Capital Cost Allowance Rate, which is the percentage rate at which businesses in Canada can claim depreciation on tangible capital assets for tax purposes.

Operating Cash Flow

Measures the cash generated from a company's normal business operations, indicating whether a company can maintain or grow its operations without new financing.

Net Working Capital

The difference between a company's current assets (like cash, inventory, receivables) and its current liabilities (like payables), indicating short-term financial health and operational efficiency.

Cash Flow From Assets

The total amount of money being transferred in and out of a business, particularly from operational, investing, and financing activities.