If a Firm's Total Fixed Cost Is $400,000 and Its

question 24

Multiple Choice

If a firm's total fixed cost is $400,000 and its fixed cost contribution per unit is $10, its break-even in units is:

• A) 30,000.
• B) 40,000
• C) 10,000.
• D) 20,000.
• E) Cannot be determined with this information.

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Definitions:

Identical Goods

Products that are exactly the same in every aspect, leading consumers to have no preference for one product over another based on characteristics, brand, or quality.

Perfect Competition

A market structure characterized by a large number of small firms, identical products, and free entry and exit, leading to price taking behavior.

Ease of Entry

Ease of entry refers to the lack of barriers for new firms to enter and compete in an industry or market, impacting competition and market dynamics.

Marginal Revenue

The supplementary income derived from the sale of one extra product or service unit.