When an Auditor Calculates the Gross Margin as a Percent

question 77

Multiple Choice

When an auditor calculates the gross margin as a percent of sales and compares it with previous periods,this type of evidence is called

• A)physical examination.
• B)analytical procedures.
• C)observation.
• D)enquiries of client.

Understand the effects of government licensing and monopoly power on market efficiency and consumer choice.

Recognize the challenges regulators face due to lack of information when imposing price regulation on monopolies.

Comprehend the incentives and behaviors of monopolists regarding efficiency, resource allocation, and pricing.

Identify the criticisms of unregulated monopolies including limited consumer choices and inefficient production.

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Definitions:

Marginal Costs

The charge for generating one more unit of a product or service.

Average Fixed Costs

The total fixed costs of production divided by the quantity of output produced, indicating how fixed costs change with different levels of production.

Marginal Costs

The increase in total cost that arises from an extra unit of production.

Fixed Factors

Inputs in production that cannot be altered in the short term, such as buildings and machinery.