Pro?ts May Decline When Sales Increase If

question 72

Multiple Choice

Pro?ts may decline when sales increase if:

• A) there are diseconomies of scale.
• B) costs remain constant.
• C) there are increasing returns to scale.
• D) the variable cost of production falls.

---

Definitions:

Customers Served

The total number of customers that have been provided services or goods by a business during a specific time period.

Flexible Budget

A budget which is modifiable in response to changes in the volume of operations or activity levels.

Variable Cost Estimates

Predictions or calculations regarding the variable costs that will be incurred during a specific period.

Net Operating Income

A company's revenue minus its operating expenses, excluding taxes and interest, representing the profitability of its core business activities.