A Firm Will Use Spontaneous Funds to the Extent Possible;

question 38

True/False

A firm will use spontaneous funds to the extent possible; however, due to credit terms, contracts with workers, and tax laws there is little flexibility in their usage.

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Definitions:

Economic Profit

The financial gain made in a transaction after subtracting both the explicit and implicit costs.

Fixed Costs

Expenses that do not change with the level of production or sales, such as rent, salaries, and insurance premiums.

Variable Costs

Costs that change in proportion to the level of output or activity in a business.

Economic Profits

The surplus remaining after total costs are deducted from total revenue, factoring in both explicit and opportunity costs.