Refer to the Figure Below

question 149

Multiple Choice

Refer to the figure below. Private incentives in this market generate deadweight loss equal to ________.

• A)½ × UW × LM
• B)½ × UV × LN
• C)½ × VW × LN
• D)½ × VW × KM

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Definitions:

Net Operating Income

The profit a business makes after subtracting operating costs, yet prior to removing interest and tax expenses.

Contribution Margin Ratio

The contribution margin ratio measures the percentage of sales revenue remaining after covering variable costs, contributing to covering fixed costs and generating profit.

Net Operating Income

A metric that calculates a company's profit after subtracting operating expenses but before interest and taxes are deducted.

Unit Variable Cost

The cost of producing one unit of a product or service which varies with the level of production or sales.