In Keep-Or-Drop Decisions, Both the Segment's Contribution Margin and Its

question 147

True/False

In keep-or-drop decisions, both the segment's contribution margin and its segment margin are useful in evaluating the performance of the segment.

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Definitions:

Marginal Benefit

The increased happiness or advantage derived from the consumption of one more unit of a good or service.

Marginal Cost

The cost of producing one more unit of a good or service, often key to determining the optimal level of production.

Competitive Market

A market structure characterized by a large number of buyers and sellers, free entry and exit, and products that are similar enough to be considered substitutes.

Nonexcludable

A characteristic of a good or service that prevents individuals who have not paid for it from being easily excluded from its consumption or use.