Which Statement Is True Concerning the Decision Rule on Whether

question 162

Multiple Choice

Which statement is true concerning the decision rule on whether to make or buy?

• A) The company should buy if the cost of buying is less than the cost of producing.
• B) The company should buy if the incremental revenue exceeds the incremental costs.
• C) The company should buy as long as total revenue exceeds present revenues.
• D) The company should buy assuming no additional fixed costs are incurred.

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Definitions:

Profit-Maximizing Monopoly

A monopolistic entity that adjusts its production volume and price to achieve the highest possible profits.

Price Per Unit

The cost assigned to a single unit of a product or service, used to determine the total price for a specific quantity.

Economic Profits

A rephrased definition of economic profit, emphasizing the gains a firm makes in excess of its total operational costs, including opportunity costs.

Monopoly

A market structure characterized by a single seller or producer supplying a unique product or service, with significant barriers to entry for potential competitors.