In Deciding Whether to Drop Its Electronics Product Line, a Company's

question 159

Multiple Choice

In deciding whether to drop its electronics product line, a company's manager should ignore:

• A)the variable and fixed costs it could save by dropping the product line.
• B)the revenues it would lose from dropping the product line.
• C)how dropping the electronics product line would affect sales of its other products, like CDs.
• D)the amount of unavoidable fixed costs.

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Definitions:

Equilibrium Price

The market price where the quantity of goods supplied is equal to the quantity of goods demanded.

Equilibrium Quantity

The quantity of goods or services that is supplied and demanded at the equilibrium price, where demand equals supply.

Price Ceiling

A government-imposed limit on how high a price can be charged for a product, service, or commodity.

Gallon

A unit of measurement for volume, primarily used in the United States, equal to 128 fluid ounces, or approximately 3.785 liters.