When Deciding Whether to Discontinue a Segment of a Business

question 112

Multiple Choice

When deciding whether to discontinue a segment of a business, relevant costs include ________.

• A) auditing expenses for the whole company
• B) fees paid to a management consultant to study the feasibility of the business segment
• C) annual insurance costs of the company
• D) future administrative costs that can be eliminated

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Definitions:

Aggregate Demand Curve

A curve depicting the total demand for all goods and services in an economy at various price levels, assuming all other factors remain constant.

Short-Run Aggregate Supply Curve

A curve that shows the relationship between the price level and the quantity of goods and services supplied in the economy in the short term, assuming input costs remain constant.

Short-Run Equilibrium

The price level and real GDP that result when the aggregate demand curve intersects the short-run aggregate supply curve.

Federal Funds Rate

The interest rate at which depository institutions lend reserve balances to other depository institutions overnight.