Which of the Following Is a Correct Statement

question 30

Multiple Choice

Which of the following is a correct statement?

• A) The lower the marginal cost, the higher the profit-maximizing price.
• B) The lower the average cost, the higher the profit-maximizing price.
• C) The less elastic the demand, the higher the profit-maximizing markup.
• D) The more elastic the demand, the higher the profit-maximizing markup.

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Definitions:

Liquidity Ratios

The two ratios—current ratio and acid test ratio—which measure a company’s ability to pay off short-term debts.

Debt Management

The process of overseeing and controlling an individual's or organization's debt load through various strategies and planning.

Vertical Analysis

A method of financial statement analysis in which each entry for each of the three major categories of accounts (or assets, liabilities, and equity) is represented as a proportion of the total account.

Net Income

The total earnings of a company after accounting for all expenses and taxes; also known as net profit.