A Markup of 40% on Cost Is Equivalent to What

question 69

Multiple Choice

A markup of 40% on cost is equivalent to what markup on selling price?

• A)29%
• B)40%
• C)60%
• D)71%

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Definitions:

Profit-Maximizing Output

The level of production at which a company can achieve the highest possible profit based on its cost structure and the market price of its products.

Economic Profit

Profit calculated by subtracting both explicit (direct) and implicit (indirect or opportunity) costs from total revenues.

Economic Profit

The profit a company makes after deducting both explicit (direct payments) and implicit (opportunity) costs.

Normal Profit

Normal profit is the minimum level of profit needed for a company to remain competitive in the market, equivalent to the opportunity cost of capital.