Discontinuing Unprofitable Products Will ________

question 196

Multiple Choice

Discontinuing unprofitable products will ________.

• A) increase profitability if the resources no longer required by the discontinued product can be eliminated
• B) increase profitability if capacity constraints are adjusted
• C) decrease profitability if the fixed costs does not change after discontinuing the particular business segment
• D) increase profitability when a large portion of the fixed costs are unavoidable

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Definitions:

Rational Expectations

The hypothesis that individuals form forecasts about the future based on all available information in a way that is consistent with the actual structure of the economy.

Active Stabilization Policy

Economic policies aimed at minimizing business cycle fluctuations through fiscal and monetary interventions by the government.

Money Supply

The total amount of money available in an economy at a particular time, including cash, coins, and balances held in checking and savings accounts.

Expected Price Level

This term represents the anticipated average price of goods and services in an economy over a certain period.