You Are Trying to Decide Whether to Buy a New

question 147

Multiple Choice

You are trying to decide whether to buy a new camera for your trip.You have a choice of a new Canon or a camera made by a generic manufacturer.You buy the Canon but unfortunately, the camera's shutter quickly breaks and you decide to buy a different brand camera to replace it.This example would reinforce the claim that:

• A)brand names are a signal of quality
• B)firms have a financial stake in maintaining the reputation of their brand names
• C)brand names always maintain consistent quality
• D)none of the above are true

---

Definitions:

Selling Price

The price at which a product or service is offered for sale to customers.

Sales Volume

The quantity of products or services sold by a company in a specific period.

Net Operating Income

A financial metric that calculates a company's profit after subtracting operating expenses, excluding taxes and interest.

Degree Of Operating Leverage

A measure, at a given level of sales, of how a percentage change in sales volume will affect profits. The degree of operating leverage is computed by dividing contribution margin by net operating income.