A Small Business Produces a Single Product and Reports the Following

question 127

Multiple Choice

A small business produces a single product and reports the following data: If the company reduces its price to $7.50, it believes that the volume will go up to 11,000 units. How would this change affect operating income?

• A)It will go up by $2,500.
• B)It will go up by $9,000.
• C)It will go down by $2,500.
• D)It will go down by $9,000.

Analyze the relationship between output levels and total variable costs.

Determine marginal costs from given production data.

Calculate and understand the significance of average fixed costs.

Distinguish between different cost concepts: total cost, average variable cost, and marginal cost.

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Definitions:

Technical Demands

The specific skills, knowledge, and abilities required to perform the tasks associated with a particular job or activity.

Tangible Factor

A quantifiable element that can be physically touched or measured, influencing outcomes or decisions.

Social Responsibility

The ethical framework that an individual or organization should act in a way that benefits society at large.

Pay

Compensation or salary received by an employee in exchange for their labor or services provided to an employer.