In the Mid-1990s, Cattle Ranchers in the United States Kept

question 216

Multiple Choice

In the mid-1990s, cattle ranchers in the United States kept raising cattle even though prices were at a ten-year low and below average total cost.What is the likely explanation for this?

• A)Continuing to operate resulted in smaller losses than would have been incurred by shutting down.
• B)The ranchers were hoping to receive government subsidies.
• C)The exit costs were too high.
• D)Cattle is an important source of protein and its production is essential for the United States.

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Definitions:

Product Units

Individual items or quantities of a product that are produced or available for purchase.

Cost-Plus Pricing

A method where the sale price is calculated by adding a particular markup on top of the product's cost per unit.

Variable Manufacturing Cost

Costs that vary directly with the level of production output, including direct materials and direct labor expenses.

Mark-Up Percentage

The percent difference between the cost of a good or service and its selling price, used to calculate the selling price from the cost.