If a Firm's Forecasted Sales Are $250,000 and Its Break-Even

question 120

Multiple Choice

If a firm's forecasted sales are $250,000 and its break-even sales are $190,000, the margin of safety in dollars is:

• A) $60,000.
• B) $250,000.
• C) $190,000.
• D) $440,000.
• E) $24,000.

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Definitions:

Income

The money received by an individual or entity, typically in exchange for labor or investment.

Total Cost Function

A mathematical formula that describes the total cost incurred by a firm in the production of goods or services as a function of output level.

Price-Discriminating Monopolist

A monopolist that charges different prices to different consumers or groups of consumers for the same product, to maximize profits.

Price Elasticity

The responsiveness of the quantity of a product demanded to a variation in its price, determined by dividing the percentage variation in the quantity demanded by the percentage modification in the product’s price.