Which of the Following Is an Example of an Economic

question 109

Multiple Choice

Which of the following is an example of an economic trade-off that a firm has to make?

• A)whether it is cheaper to produce with more machines or with more workers
• B)deciding why consumers want its products
• C)whether or not consumers will buy its products
• D)deciding what profit margin it desires for its products

---

Definitions:

Straight-Line Depreciation

is a method of allocating the cost of a tangible asset over its useful life in equal annual amounts.

Incremental Sales

The additional revenue generated from a specific business action or decision.

Cash Operating Expenses

Expenditures that a company makes in cash for the day-to-day running of its business.

Capital Budgeting

The process of planning and managing a company's long-term investments in assets and projects based on their potential to generate earnings and cash flow.