Figure 11-7 -Suppose You Are the Owner of a Picture Frame Store

question 342

Multiple Choice

Figure 11-7
-Suppose you are the owner of a picture frame store. Assume that the average price customers are willing to pay for each picture frame is $120. Also, suppose your fixed costs (FC) total $32,000 (real estate taxes, interest on a bank loan, etc.) and unit variable cost (UVC) for a picture frame is $40 (labor, glass, frame, and matting) . Figure 11-7a above shows that by selling 200 pictures, your picture frame store will

• A) break even.
• B) earn a profit.
• C) incur a loss.
• D) have no fixed costs.
• E) have no variable costs.

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Definitions:

Probability Distribution

A statistical function describing the likelihood of various outcomes in an experiment.

Expected Value

A statistic that represents the average outcome of a set of events, weighted by the likelihood of each event.

Probability Distribution

A computation in statistics identifying each possible outcome and its probability for a random variable within a specified range.

Investment's Risk

The potential for losing money or not achieving the expected return on an investment due to various factors like market volatility.