Suppose Sam's Shoe Co

question 126

Multiple Choice

Suppose Sam's Shoe Co.makes one kind of shoe.An example of a fixed cost for this company would be:

• A) the lease for the factory building.
• B) the leather needed to make the shoes.
• C) the needles for the sewing machines that need to be replaced after sewing every 1,000 pairs.
• D) All of these are examples of fixed costs.

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Definitions:

Output

The amount of goods or services produced by a business, sector, or economy over a specific period.

Explicit Costs

Direct, out-of-pocket payments for costs of production, such as wages, rent, and materials.

Entrepreneur's Potential Earnings

The forecasted income an entrepreneur can expect from their business venture, taking into account risks and opportunities.

Annual Lease

A contract for the rental of property, typically real estate, that lasts for one year.