A Company Is Considering the Following Alternatives Which of the Following Are Relevant in Choosing Between the Alternative

question 58

Multiple Choice

A company is considering the following alternatives: . $\begin{array}{lrr}&\text { Alternative 1 }&\text { Alternative 2 }\\\text { Revenues } & \$ 120,000 & \$ 120,000 \\\text { Variable costs } & 60,000 & 70,000 \\\text { Fixed costs } & 35,000 & 35,000\end{array}$ Which of the following are relevant in choosing between the alternatives?

• A) Variable costs
• B) Revenues
• C) Fixed costs
• D) Variable costs and fixed costs

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Definitions:

Marginal Revenue Product

The additional revenue generated from using one more unit of a factor of production or input.

Mechanics

The branch of physics that deals with the behavior of physical bodies when subjected to forces or displacements and the subsequent effects of the bodies on their environment.

Profit

The financial gain made in a transaction or through business operations after subtracting all expenses.

Marginal Revenue Product

The extra income produced through the use of an additional unit of a resource, like labor or capital.