A Profit-Maximizing Firm Continues to Operate Even Though It Is

question 9

Multiple Choice

A profit-maximizing firm continues to operate even though it is losing money.It sells its product at a price of $100.

• A)Average total cost is less than $100.
• B)Average fixed cost is less than $100.
• C)Marginal cost is increasing.
• D)Average variable cost is less than $100.
• E)Marginal cost is decreasing.

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Definitions:

Product Margin

The difference between the selling price of a product and the cost of goods sold (COGS), indicating the profit per unit sold.

Direct Labor Cost

The total amount of wages paid to employees who are directly involved in the manufacturing or production process.

Meeting With Clients

A business activity where representatives of a company interact with its clients to discuss services, products, or ongoing projects.

Activity Cost Pools

Groupings of individual costs based on the activities that cause the company to incur these costs, used in activity-based costing.