You Will Buy Another Pair of Jeans Only If

question 170

Multiple Choice

You will buy another pair of jeans only if:

• A) the marginal benefit from the change exceeds the average benefit from the change.
• B) there are no costs involved.
• C) the change increases social welfare.
• D) there is no uncertainty about the results of the change.
• E) the expected marginal benefit exceeds the expected marginal cost.

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Definitions:

Common Fixed Expenses

Overhead costs that are not directly tied to production or sales volume, including rent, salaries, and insurance, shared across departments or product lines.

Period Cost

Costs that are expensed in the period in which they are incurred, typically including selling, administrative, and other non-production costs.

Net Operating Income

A financial metric that calculates a company's profitability by subtracting operating expenses from its operating revenues.

Break-Even

The point at which total costs and total revenue are equal, meaning there is no profit or loss.