Which of the Following Is True of the Assumptions Made

question 55

Multiple Choice

Which of the following is true of the assumptions made in a cost-volume-profit analysis?

• A)The analysis assumes that the costs of products cannot be known with certainty.
• B)The analysis assumes a linear revenue function.
• C)The analysis assumes that what is produced is not sold entirely.
• D)The analysis assumes a non-linear cost function.

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Definitions:

Perfectly Competitive Industry

An economic framework where numerous sellers and buyers exist, with unrestricted entry and exit, and the product offered is uniform.

Increase Revenue

Strategies or actions that lead to a rise in the total amount of money received by a company for goods sold or services provided.

AVC

The average variable cost, which is the total variable costs divided by the quantity of output produced.

Perfectly Competitive Firms

Businesses operating in a market where no single firm can influence the market price or product quality, leading to optimal efficiency.