How Does Seasonality Create Fluctuations in a Firm's Net Income

question 45

Multiple Choice

How does seasonality create fluctuations in a firm's net income over a year?

• A) Cost of goods sold will rise and fall along with sales, while administrative and other costs will remain relatively steady.
• B) Cost of goods sold will rise when sales fall, and vice versa, while administrative and other costs will remain relatively steady.
• C) Cost of goods sold, along with administrative and other costs, will rise when sales fall, and vice versa.
• D) Cost of goods sold, along with administrative and other costs, will rise and fall along with sales.

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Definitions:

Dia-

A prefix in medical terms indicating through, between, apart, or across.

Mal-

A prefix in English meaning "bad" or "wrongly."

Micro-

A prefix denoting a factor of one millionth or pertaining to smallness.

Prognosis

A medical term for predicting the likely outcome of an illness or disease.