A Decrease in the Margin of Safety Would Be Caused

question 42

Multiple Choice

A decrease in the margin of safety would be caused by a(n) :

• A) increase in the total fixed costs.
• B) increase in total revenue (sales).
• C) decrease in the break-even point.
• D) decrease in the variable cost per unit.

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Definitions:

Bid-rigging

An illicit agreement between parties to fix the outcome of a bidding process to benefit at least one of the participants.

Cartels

Associations of independent businesses formed to regulate production, pricing, and marketing of goods to restrict competition.

Auctions

Auction systems in which products or services are offered to the person who presents the highest offer.

Winner's Curse

A phenomenon in auctions where the winning bidder overpays due to overestimation of the item's value.