Sasha Is a Well-Educated Entrepreneur Who Operated a Small Business

question 226

Multiple Choice

Sasha is a well-educated entrepreneur who operated a small business in her home country of Evensplitia. At the encouragement of American relatives, Sasha recently immigrated to the United States and applied for citizenship. "In Evensplitia, tax rates were very high," Sasha complained. "The government used my taxes to finance all sorts of social programs to help the less fortunate. While I want to help, it has really undermined the profit incentive of individuals such as me. I feel those high taxes have stunted economic growth." Sasha's comments illustrate the reason many socialist countries are experiencing a(n)

• A) antitrust problem.
• B) depression.
• C) brain drain.
• D) budget surplus.

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Definitions:

Monthly Fixed Expense

Costs that do not fluctuate with the volume of production or sales, such as rent, salaries, and insurance, incurred on a monthly basis.

Target Profit

Target profit is the amount of net income a company aims to achieve for a specific period as part of its financial and operational goals.

Break-Even Sales

The amount of revenue from sales needed to cover all fixed and variable expenses, at which point a business neither profits nor loses money.

Contribution Margin Ratio

A financial metric indicating the portion of sales revenue that is not consumed by variable costs, represented as a percentage of total sales.