Assume a Factory That Currently Employs 25 Workers Is Considering

question 4

Multiple Choice

Assume a factory that currently employs 25 workers is considering adding another 5 workers to its payroll.Economists would classify this as:

• A)a short-run decision.
• B)a long-run decision.
• C)neither a short-run nor a long-run decision.
• D)both a short-run and a long-run decision.

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Definitions:

Total Contribution Margin

The total amount of revenue remaining after all variable costs have been subtracted, indicating how much revenue is available to cover fixed costs and generate profit.

Sales Volume

The quantity of goods or services sold within a specific period.

Break-even Point

is the level of sales at which total revenue equals total costs, resulting in neither profit nor loss for the business.

Variable Expenses

Expenses that change in proportion with the level of business activity or output.