Exhibit 7-12  Marginal Revenue and Cost Per Unit Curves If

question 185

Multiple Choice

Exhibit 7-12  Marginal revenue and cost per unit curves If price is equal to OD for the firm shown in Exhibit 7-12, total profit is maximized when:

• A) output is X.
• B) output is Y.
• C) output is Z.
• D) output is greater than Z.

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Definitions:

Retail Inventory Method

An accounting method used by retailers to estimate inventory cost by calculating a cost-to-retail ratio.

FOB Destination

FOB Destination is a shipping term indicating the seller bears the shipping costs and maintains ownership until the goods reach the buyer's location.

Periodic Inventory System

An inventory accounting system where the inventory balance is updated at specific intervals, rather than continuously.

Retained Earnings

The portion of net income that is not distributed to shareholders but is kept by the company to be reinvested in its core business or to pay debt.