Any Positive Economic Profit or Positive Net Present Value May

question 79

Multiple Choice

Any positive economic profit or positive net present value may arise from

• A)market imperfections or inefficiencies such as a monopoly situation.
• B)economies of scale.
• C)product differentiation.
• D)government policy.
• E)all of the above statements are correct

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Definitions:

Sales Dollars

Represents the total revenue generated from the sale of goods or services before any expenses are subtracted.

Common Fixed Expenses

Expenses that remain constant in total regardless of changes in the level of activity or volume of output within a certain range.

Variable Costing

An accounting method that includes only variable production costs (direct materials, direct labor, and variable manufacturing overhead) in product costs and treats fixed manufacturing overhead as a period expense.

Contribution Format

A method of profit reporting that separates fixed and variable costs, highlighting the contribution margin of products, services, or business segments.