Figure 2.4 -Joe Runs a Business and Needs to Decide How Many

question 174

Multiple Choice

Figure 2.4
-Joe runs a business and needs to decide how many hours to stay open. Figure 2.4 illustrates his marginal benefit of staying open for each additional hour. Suppose that Joe's marginal cost of staying open per hour is $24. How many hours should Joe stay open?

• A) 5 hours
• B) 6 hours
• C) 3 hours
• D) 4 hours

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Definitions:

Sensitivity Analysis

A technique used to determine how different values of an independent variable will affect a particular dependent variable under a given set of assumptions.

Forecasting Risk

The potential for actual outcomes to differ significantly from predicted outcomes in business or financial forecasting models.

Scenario Analysis

An approach to understanding future prospects by exploring various potential outcomes.

Scenario Analysis

The practice of scrutinizing possible future situations by looking at a range of alternative scenarios.