If Costs a Firm $10 to Produce a Good and the Same

question 138

Multiple Choice

If costs a firm $10 to produce a good and the same good sells for $7 abroad, then this firm is engaging in

• A) profit maximization.
• B) price discrimination.
• C) price differentiation.
• D) dumping.

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Definitions:

Operating Leverage

A measure of the relative mix of a business’s variable costs and fixed costs, computed as contribution margin divided by operating income.

Highly Automated Industries

Sectors where machines and advanced technologies preponderantly perform production and operational processes, reducing human intervention.

Break-even Point

The point at which total revenues equal total costs and expenses, leaving no net loss or gain.

Margin of Safety

The difference between actual or expected sales and the sales level at which a company breaks even, providing a buffer against losses.