Refer to the Following Table: the Optimal Level of Activity

question 63

Multiple Choice

Refer to the following table: The optimal level of activity is:

• A)2
• B)3
• C)4
• D)5
• E)There is no optimal level in this case because marginal benefit does not equal marginal cost at any of the activity levels.

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Definitions:

Inventory Decrease

A reduction in the quantity of goods held in stock by a company.

Investing Activities

Transactions involving the purchase and sale of long-term assets or investments, part of a company’s cash flow.

Cash Payments

Financial transactions involving the outflow of cash to settle obligations or purchase goods and services.

Debt Principal

The original amount of money borrowed or the remaining balance of a loan, exclusive of interest.