Invention Cannot Be Successful Financially If Price Is

question 191

Multiple Choice

Invention cannot be successful financially if price is

• A)greater than marginal cost because invention is based largely on social costs.
• B)greater than marginal cost because invention is based solely on external costs.
• C)equal to marginal cost because invention is based largely on variable costs.
• D)equal to marginal cost because invention is based largely on fixed costs.

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Definitions:

Contribution Margin

The gap between a product's sales revenue and its variable expenses, which serves to offset fixed costs and produce earnings.

Variable Cost

Expenses that adjust in direct correlation with changes in production or sales levels.

Fixed Costs

Expenses that do not change with the level of production or sales activities within a certain range, such as rent, salary, insurance, and loan payments.

Break-even Point

The break-even point is the level of production or sales at which total revenues equal total costs, resulting in no net profit or loss.