Decide Whether the Statement Makes Sense

question 253

Essay

Decide whether the statement makes sense. Explain your reasoning.
-The government has been borrowing from the Social Security trust fund for many years.
This will cause a problem when it has to pay out more in Social Security benefits than it
collects in Social Security taxes. Sally, who graduated college in 2005, says that it won't
happen in her lifetime but that it might happen in her children's lifetime.

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Definitions:

Relevant Costs

Costs that should be considered when making decisions because they will be affected by the decision.

Markup Percentage

The percentage difference between the cost of a good or service and its selling price, indicating the gross profit margin.

Opportunity Cost

The loss of potential gain from other alternatives when one alternative is chosen.

Contribution Margin

The amount of revenue remaining after deducting variable costs, used to cover fixed costs and generate profit.