When Making the Output Decision to Maximize Profit and When

question 61

Multiple Choice

When making the output decision to maximize profit and when output is a discrete choice variable,a manager should choose

• A)the level of output where marginal revenue exactly equals marginal cost.
• B)the last level of output for which marginal revenue exceeds marginal cost.
• C)the output level where marginal revenue is as close to marginal cost as possible.
• D)the output level where sunk costs are minimized and total revenue is maximized.

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Definitions:

Cash Flows

The net amount of cash being transferred into and out of a business, indicating its financial health.

Probability-Weighted

A method that assigns weightings to different potential outcomes based on their likelihood of occurrence, used in various analyses including risk assessment and decision making.

Time Value

The concept that money available at the present time is worth more than the same amount in the future, due to its potential earning capacity.

Fair Value Allocation

The process of estimating the market value of assets and liabilities acquired in a business combination for the purpose of financial reporting.