If the Price of Its Product Just Equals the Average

question 457

Multiple Choice

If the price of its product just equals the average variable cost of production for a competitive firm

• A) total revenue equals total fixed cost and the firm's loss equals total variable cost.
• B) total revenue equals total variable cost and the firm's loss equals total fixed cost.
• C) total fixed cost is zero.
• D) total variable cost equals total fixed cost.

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Definitions:

ABC Analysis

ABC Analysis is an inventory categorization technique that divides items into three categories (A, B, and C) based on their importance and value, with A being the most valuable.

Critical Items

Goods or components crucial for the manufacturing process or customer satisfaction, often given higher priority in inventory management.

Inventory

The total amount of goods stored by a company that is ready or will be ready for sale.

Service Inventory

Intangible goods in a service operation that cannot be stored or inventoried in the traditional sense, such as available hotel rooms or hours of consulting.