Estimating Net Profit Margin Directly Is Difficult Because It Is

question 191

True/False

Estimating net profit margin directly is difficult because it is so volatile.

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Definitions:

Marginal Revenue

The increase in earnings resulting from the sale of one extra good or service.

Economic Profit

the difference between total revenue and total opportunity costs; a measure of profit beyond the normal return on investment.

Marginal Cost

The addition to total cost from producing one additional unit of a product.

Perfectly Competitive Firm

A perfectly competitive firm operates in a market where there are many buyers and sellers, the product is homogenous, and there is free entry and exit from the market.