Maritime Ltd

question 217

Multiple Choice

Maritime Ltd.,a wholesaler that sells thousands of different products to business and institutional customers,relies mostly on sales promotion and advertising.The company is looking at various ways to reduce expenses,and the vice-president feels this can be achieved by shifting one of the company's distribution centres to a low-rent,low-tax area.If the following facts were known,which one would strengthen the vice-president's argument?

• A) Maritime recently signed a long-term lease for the distribution centre's current location.
• B) Taxes will increase by a larger percentage than the percentage that rents will decrease.
• C) Maritime's competitors can also move to the low-rent,low-tax area.
• D) No changes in tax policy are expected in the proposed area.
• E) Changes in the macroeconomic environment that are beyond Maritime's control may reduce costs at their current location.

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Definitions:

Total Cost

The complete cost of production that includes both variable and fixed costs.

Economics

The social science that studies how individuals, governments, firms and nations make choices on allocating scarce resources to satisfy their unlimited wants.

Farming

The practice of cultivating crops and raising livestock for food, fiber, biofuel, medicinal plants, and other products used to sustain and enhance human life.

Economic Profit

The gap between an enterprise's total earnings and its combined explicit and implicit outlays.