An Important Qualitative Factor to Consider Regarding a Special Order

question 65

Multiple Choice

An important qualitative factor to consider regarding a special order is the

• A)variable costs associated with the special order.
• B)avoidable fixed costs associated with the special order.
• C)effect the sale of special-order units will have on the sale of regularly priced units.
• D)incremental revenue from the special order.

---

Definitions:

Profit-Maximizing Number

The output level at which a firm achieves the highest possible profit, determined by revenue and cost structures.

Shutdown Quantity

The amount of output at which a company's revenue just covers its variable costs, prompting it to cease operations temporarily if prices fall below this level.

Monopolistically Competitive

This refers to a market structure where many companies sell products that are similar but not identical, allowing for some degree of market power and product differentiation.

Economic Profit

The difference between a firm's total revenues and its opportunity costs, representing the additional gain over what could have been earned in the next best alternative.