A Bed of Oysters Is Not an Example of a Factor

question 109

True/False

A bed of oysters is not an example of a factor of production, but the shucked oysters used to make oyster stew is a factor of production.

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Definitions:

Fixed Costs

Costs that do not change in total with changes in activity level over a relevant range, such as rents, salaries, and insurance premiums.

Break-even Sales

The amount of revenue needed to cover all fixed and variable costs, resulting in zero profit or loss.

Fixed Costs

Expenses that do not change with the level of goods or services produced by a business.

Contribution Margin

The difference between sales revenue and variable costs, used to cover fixed costs and to provide profit to the company.