The Decision to Continue or Discontinue a Segment of the Business

question 27

Multiple Choice

The decision to continue or discontinue a segment of the business should focus on:

• A) sales minus total variable expenses and total fixed expenses.
• B) sales minus total variable expenses and avoidable fixed expenses of the segment.
• C) sales minus total variable expenses and allocated fixed expenses of the business.
• D) None of these.

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Definitions:

Supply Curve

A graphical representation used in economics to show the relationship between the price of a good or service and the quantity of it that producers are willing to supply.

Government's Revenue

The money received by a government from taxes and non-tax sources to enable it to undertake government expenditures.

Efficiency Loss

Refers to the loss of economic efficiency when the optimal allocation of resources is not achieved, often due to market failures or distortions.

Demand Curve

A chart that displays how the cost of a product affects the amount consumers want to buy, usually showing a decline from left to right.