Xplosafe, the Company Profiled in the Opening Feature for Chapter

question 41

Multiple Choice

Xplosafe, the company profiled in the opening feature for Chapter 7, interviewed four attorneys before selecting the attorney they now use. They selected the attorney they did for two reasons:

• A) his fees were the lowest and he is an entrepreneur himself
• B) his references were the strongest and he is a former examiner for the U.S. Copyright Office
• C) he is the President of the Oklahoma City, Oklahoma, bar association and he had experience working with startups
• D) he is a startup entrepreneur himself and he is a former examiner for the U.S. Patent and Trademark Office
• E) he had more experience working with startups and he agreed to alter his fee structure to charge less at the beginning and more as Xplosafe became profitable

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Definitions:

Average Variable Costs

Costs that vary with the level of output, divided by the quantity of output produced, indicating the variable cost per unit.

Total Fixed Costs

The sum of all costs that remain constant regardless of the level of production or sales in a company.

Marginal Cost

The addition to total cost that results from producing one more unit of output.

Diseconomies of Scale

The condition in which a company's costs per unit increase as it produces more units, typically due to inefficiencies that arise with increased size or output.