In the Merchandising Sector ________

question 34

Multiple Choice

In the merchandising sector ________.

• A) only variable costs are subtracted to determine gross margin
• B) fixed overhead costs are subtracted to determine gross margin
• C) fixed overhead costs are subtracted to determine contribution margin
• D) all operating costs are subtracted to determine contribution margin

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Definitions:

Long Run

A period of time in which all factors of production and costs are variable, allowing for all adjustments to take place in the analysis of economic conditions.

Average Variable Cost

The total variable costs of production divided by the quantity of output produced.

Marginal Revenue

The additional revenue that a firm receives from selling one more unit of a good or service.

Average Fixed Cost

The fixed costs of production (costs that do not vary with output) divided by the quantity of output produced.