Black Productions Has Three Models: D,E,and F

question 182

Multiple Choice

Black Productions has three models: D,E,and F.The following information is available:

Black Productions is thinking of discontinuing model F because it is reporting an operating loss.All fixed expenses are unavoidable.Assuming Black Productions discontinues model F and does not replace it,what effect will this have on operating income?

• A)Decrease $10,000
• B)Increase $10,000
• C)Increase $6,000
• D)Decrease $6,000

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Definitions:

Profit Maximization

The process or strategy undertaken by a firm to generate the maximum possible profits with the available resources and market conditions.

Short-run Equilibrium

Describes a situation in a market where supply equals demand within a short period, without enough time for all factors of production to adjust.

Monopoly

A market structure characterized by a single seller, selling a unique product in the market.

Tacit Collusion

An informal and indirect form of collusion among competitors without explicit agreement, often through signaling and understanding of mutual interests.