Since Few Firms Are Able to Develop Exact Curves of Cost

question 65

Multiple Choice

Since few firms are able to develop exact curves of cost and revenue:

• A)it is countervailing power which determines both unit costs and selling prices, and thus profits.
• B)it is very difficult to earn a positive return on the book value of invested capital.
• C)they make rough but reasonably informed guesses in setting price.
• D)they automatically select the usual 30 percent markup.
• E)they proceed in a manner not specified above.

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Definitions:

Future Value

The predicted amount of money that an investment will grow to at a specified future date, based on an assumed rate of growth.

Interest Rate

A lender's price to a borrower for the asset's usage, quantified as a percentage of the main sum.

Cash Flows

The movement of funds in and out of a business, determining its operating, investing, and financing activities' liquidity.

Lottery Prize

A financial reward won in a lottery, typically involving a large cash sum or valuable goods.