The Risk Caused by Changes in Inflation That Affect Revenues

question 127

Multiple Choice

The risk caused by changes in inflation that affect revenues, expenses and profitability is called:

• A) interest rate risk
• B) business risk
• C) purchasing power risk
• D) financial risk

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Definitions:

Average Total Cost

The cost per unit is calculated by dividing the sum of fixed and variable production costs by the total quantity of units produced.

Market Price

The current price at which an asset or service can be bought or sold in a particular marketplace.

Marginal Revenue

The profit gained by selling an extra unit of a product or service.

Market Price

The ongoing cost at which one can purchase or sell a good or service in the market.