After Selling 1000 Three-Ring Binders, Tony DiFulvio Realises That the Marginal

question 6

Multiple Choice

After selling 1000 three-ring binders, Tony DiFulvio realises that the marginal revenue from selling the last binder was less than the marginal cost.From this we can conclude that

• A)Tony's business earns a short-run economic profit.
• B)Tony should shut down his business temporarily.
• C)Tony's profit fell after selling his 1000th three-ring binder.
• D)Tony's profit would be greater if he sold an additional three-ring binder.

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Definitions:

Interest Expense

The amount an entity pays for the use of borrowed funds throughout a certain duration.

Net Cash Flow

The amount of cash generated or used by a company in a given period, calculated as the sum of cash flow from operating, investing, and financing activities.

Contingent Liability

A future financial liability that could emerge based on the result of a particular event.

Financial Statements

Documents offering a summary of a firm's financial status, encompassing the balance sheet, income statement, and cash flow statement.