Figure 2-7 Apple Recently Announced That the Company Is Exploring the Electric

question 226

Multiple Choice

Figure 2-7

Apple recently announced that the company is exploring the electric vehicle market, and is looking to produce vehicles as early as 2020.Assume Apple chooses to produce both traditional electric-engine vehicles and self-driving electric-engine vehicles.Figure 2-7 shows changes to its production possibilities frontier in response to new developments and different strategic production decisions.
-Refer to Figure 2-7.Assume a technological advancement greatly reduces the cost to produce self-driving vehicles.This is best represented by the

• A)movement from E to F in Graph A.
• B)movement from G to H in Graph B.
• C)movement from K to L in Graph C.
• D)movement from H to J in Graph B.

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Definitions:

Contribution Margin Ratio

The ratio of contribution margin to sales revenue, used to measure the profitability and efficiency of a product or service.

Margin Of Safety

The difference between the actual or expected profitability of a project and the break-even point. It is a cushion against uncertainty.

Net Operating Income

The profit generated from a company's everyday operations, calculated by subtracting operating expenses from operating income.

Contribution Margin

The difference between sales revenue and variable costs of a product or service, indicating the amount contributing to covering fixed costs and generating profit.