-In the Above Figure, by Increasing Its Output from Q₂

question 478

Multiple Choice

-In the above figure, by increasing its output from Q₂ to Q₃, the firm

• A) reduces its marginal revenue.
• B) increases its marginal revenue.
• C) decreases its profit.
• D) increases its profit.

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Definitions:

Cost Driver

A factor that causes or relates to a change in the cost of an activity or product.

Activity-Based Budgeting (ABB)

A budgeting approach that determines the cost of activities necessary for producing a product or service, aiming to improve cost efficiency.

Activity-Based Costing (ABC)

A costing methodology that assigns overhead and indirect costs to specific activities, thereby providing more accurate cost information.

Sales Volume

Refers to the number of units of product or service sold by a company over a specific time period, indicating business activity level.