A Small Business Produces a Single Product and Reports the Following

question 107

Multiple Choice

A small business produces a single product and reports the following data: Fixed costs go up by $2,000 per month, and the price is raised by $0.20 per unit. Assume other factors remain the same. How would this change affect operating income?

• A)It will go up by $500.
• B)It will go up by $1,500.
• C)It will go down by $2,500.
• D)It will stay the same.

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Definitions:

Publicly Traded Bonds

Bonds issued by companies or governments that are available for purchase and sale on public stock exchanges.

Long-Term

Pertains to a time frame extending over a significant period, usually beyond one year, often used in the context of investments, loans, and planning.

European Put

A financial derivative option that gives the holder the right, but not the obligation, to sell a specified amount of an underlying asset at a predetermined price on or before a specified expiration date, exclusively in the European context where it can only be exercised at expiration.

Strike Price

The predetermined price at which the holder of an option contract can buy (in case of a call option) or sell (in case of a put option) the underlying asset.