Many Stores Are Open 24 Hours a Day

question 104

Multiple Choice

Many stores are open 24 hours a day.When store managers make the decision to stay open 24 hours,it must be the case that

• A) the marginal benefit of staying open all day and the marginal cost to remaining open all day are at least equal.
• B) the marginal benefit of staying open all day must always be greater than the marginal cost to remaining open all day.
• C) the marginal cost of staying open all day must always be greater than the marginal benefit to remaining open all day.
• D) the calculation of marginal benefits or marginal costs of remaining open all day plays no role.
• E) the marginal benefit of remaining open all day is zero.

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Definitions:

Machine Hour

A unit of measurement for the operational use of a machine, implying the total time a machine is functional and available for production.

Markup Percentage

The proportion of the cost of goods that is added to cover the overhead and profit, which sets the selling price.

Variable Cost

Costs that change in proportion to the level of production or sales activity, such as raw materials and direct labor.

Markup Percentage

The percentage added to the cost of goods to cover overhead and profit when setting the selling price.