Figure 10-13

question 124

Multiple Choice

Figure 10-13. On the graph, Q represents the quantity of plastics and P represents the price of plastics.
-Refer to Figure 10-13. If 325 units of plastics are produced and consumed, then the

• A)social optimum has been reached.
• B)market equilibrium has been reached.
• C)government must have imposed a corrective tax to guide the market to this outcome.
• D)government must have offered a corrective subsidy to guide the market to this outcome.

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Definitions:

Operating Leverage

A measure of how revenue growth translates into growth in operating income. It is an indicator of the fixed versus variable costs in a company's operation.

Fixed Costs

Expenses that do not change with the level of output or sales within a certain range and period.

Break-Even Point

The point at which total revenues equal total costs, and the business makes neither profit nor loss.

Fixed Expenses

A repackaged definition of fixed costs emphasizing their nature as constant across different levels of output or sales.