A Problem Can Be Created When There Are Different Levels

question 63

Multiple Choice

A problem can be created when there are different levels of information available to different people in an economic interaction or exchange. This is known in economic and financial theory as

• A)information advantage.
• B)unwarranted information advantage.
• C)unfair trade.
• D)asymmetric information.
• E)None of these.

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Definitions:

Variable Selling Expense

Costs that vary directly with the volume of sales, such as commissions and shipping charges.

Shipping Costs

Expenses associated with the transportation of goods from the supplier to the point of sale or end-user.

Contribution Margin

The amount remaining from sales revenues after all variable expenses have been deducted.

Fixed Costs

Expenses that do not change in proportion to the activity of a business, i.e., they remain constant regardless of the level of production or sales.