A Firm Has $50,000 in Fixed Costs, a Selling Price

question 91

Multiple Choice

A firm has $50,000 in fixed costs, a selling price of $25 per unit, and variable costs of $5 a unit. If the fixed costs are reduced to $40,000:

• A) Breakeven volume will decrease.
• B) Breakeven volume will increase.
• C) Profits will be reduced.
• D) Selling price will be increased.

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Definitions:

Chemical Process

A method or means of changing one or more chemicals or chemical compounds, often involving reactions that transform materials.

Cortisol

A hormone synthesized by the adrenal glands that is often secreted in reaction to stress and decreased levels of blood sugar.

Myelin Sheath

A fatty layer encasing the axons of some neurons, which increases the speed at which electrical impulses propagate along the nerve cells.

Adrenal Glands

Endocrine glands located above the kidneys, responsible for producing hormones like adrenaline and cortisol, involved in stress response.