At a Breakeven Point of 200 Units, the Variable Costs

question 37

Multiple Choice

At a breakeven point of 200 units, the variable costs were $400 and the fixed costs were $200. What will the next (i.e., 401st) unit sold contribute to profit before income taxes?

• A) $0
• B) $2.00
• C) $1.00
• D) Cannot be determined

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Definitions:

Phillips Curve

A macroeconomic model describing an inverse relationship between rates of unemployment and corresponding rates of inflation, suggesting that inflation and unemployment have a stable and inverse relationship.

Federal Reserve

The central bank of the United States, responsible for regulating the US monetary and financial system.

Money Supply

The comprehensive pool of financial assets in an economy at any given time, which includes coins, cash, and the amounts in both checking and savings accounts.

Inflation

The rate at which the general level of prices for goods and services is rising, subsequently eroding purchasing power.