Which of the Following Is an Opportunity Cost Associated with Dropping

question 106

Multiple Choice

Which of the following is an opportunity cost associated with dropping a business segment?

• A) The revenue given up
• B) The avoidable fixed costs
• C) The benefits from using excess capacity for something else
• D) The increase in employee morale

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Definitions:

Terms of Payment

The conditions under which a seller will complete a sale, often specifying the period allowed to a buyer to pay off the amount due.

Compensating Balance

A minimum bank balance that a borrower must maintain as a condition for obtaining a loan, often used to compensate banks for the loan services.

Effective Interest Rate

The real interest rate on a loan or financial product, accounting for the effect of compounding over a given period.

Minimum

The lowest possible amount, quantity, or degree achievable or permissible.