A Local Business Sells Its Product for $40 Each in a Competitive

question 195

Multiple Choice

A local business sells its product for $40 each in a competitive price-taker market. At its present rate of output, its marginal cost is $40, average variable cost is $45, and average total cost is $60. The business should

• A) increase output
• B) reduce output but not to zero
• C) maintain the present rate of output
• D) shut down
• E) raise the price

Determine the cost of a product based on its selling price and markup percentage.

Calculate markup percentages based on cost and selling price.

Analyze real-world business scenarios to apply markup principles.

Distinguish between markup based on cost and markup based on selling price.

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Definitions:

Reaction Time

The amount of time it takes to respond to a stimulus.

Observable Behaviours

Observable and quantifiable behaviors or responses of a person to either external or internal factors.

Psychological Perspective

A viewpoint in psychology that emphasizes understanding human behavior by examining mental functions and processes.

Emotional Reactions

Responses characterized by intense feelings that occur in reaction to an external stimulus or internal thought process.