A Tradeoff Is

question 373

Multiple Choice

A tradeoff is

• A) represented by a point inside a PPF.
• B) represented by a point outside a PPF.
• C) a constraint that requires giving up one thing to get another.
• D) a transaction at a price either above or below the equilibrium price.

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Definitions:

Relevant Range

The range of activity within which assumptions made about cost behavior are valid. Beyond this range, fixed and variable cost patterns may change.

Break-even Point

The level of sales or production at which total revenues equal total costs, resulting in neither profit nor loss.

Contribution Margin

The selling price of a product minus the variable cost per unit, used to cover fixed costs and contribute to net profit.

Fixed Costs

Expenses that do not change with the level of production or sales activities within a short time.