When Will the Elimination of a Product Line Have No

question 87

Multiple Choice

When will the elimination of a product line have no effect on the company's overall profit?

• A) When the avoidable fixed costs equal the product line's contribution margin
• B) When the unavoidable fixed costs equal the product line's contribution margin
• C) When there are no fixed costs incurred by the product line
• D) When the product line contribution margin is negative

---

Definitions:

Bounded rationality

A concept suggesting that individuals make decisions based on limited information, limited time, and cognitive limitations.

Behavioral decision theory

A field of study that examines the psychological factors influencing individuals' decision-making processes.

Certainty, risk, and uncertainty

Certainty, risk, and uncertainty are terms used to describe the predictability of outcomes, where certainty is knowing the outcome, risk involves potential loss, and uncertainty indicates unknown future outcomes.

Problem-solving decisions

The process of identifying a problem and determining the most effective course of action to resolve it.