Danny's Lawn Equipment Has Actual Sales of $800000 and a Break-Even

question 54

Multiple Choice

Danny's Lawn Equipment has actual sales of $800000 and a break-even point of $520000. How much is its margin of safety ratio?

• A) 35%
• B) 46%
• C) 54%
• D) 65%

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Definitions:

Scarcity

Scarcity refers to the fundamental economic problem of having seemingly unlimited human wants in a world of limited resources, leading to the necessity of allocation decisions.

Production

The process of combining various inputs to make goods or services for consumption.

Comparative Advantage

The capacity of an individual or country to manufacture a given good or service more efficiently, incurring lower opportunity costs than their counterparts.

Opportunity Cost

The omission of possible gains that could come from different options when one is preferred.