A Large Pharmaceutical Company Invents a Microchip That Can Be

question 13

True/False

A large pharmaceutical company invents a microchip that can be implanted in people with diabetes to provide time-released amounts of insulin. A patent for this invention will set up a temporary oligopoly for the company.

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Definitions:

Break-Even Point

The level of production or sales at which total revenues equal total expenses, resulting in no net profit or loss.

Contribution Margin Ratio

The ratio of contribution margin to sales revenue, indicating the percentage of each sales dollar available to cover fixed costs and provide profit.

Fixed Expenses

Costs that do not fluctuate with changes in production level or sales volume, such as rent, salaries, and insurance.

Variable Costing

An accounting method that includes only variable production costs (direct materials, direct labor, and variable manufacturing overhead) in product costs.