A Product Whose Revenues Do Not Cover the Sum of Its

question 4

True/False

A product whose revenues do not cover the sum of its variable costs, its traceable fixed costs, and its allocated share of general corporate administrative expenses should usually be dropped.

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Definitions:

Perfectly Inelastic

Describes a situation in which the quantity demanded of a good does not change regardless of changes in its price.

Deadweight Loss

A loss of economic efficiency that can occur when the equilibrium for a good or service is not achieved or is unachievable.

Tax

A required financial fee or another kind of duty enforced on a taxpayer by government authorities, designed to raise funds for government outlays and a range of public expenses.

Price-Elastic Supply

A situation where the quantity supplied of a good changes significantly as a result of changes in its price.