Northern Company Has Three Departments, Wires, Ropes and Cables

question 58

Multiple Choice

Northern Company has three departments, Wires, Ropes and Cables. At the end of the accounting period the following information is available:

Northern Company is considering eliminating the Wires department. What will be the change in Northern Company's profit if the Wires department is eliminated? Assume that all indirect expenses are unavoidable and that all other circumstances are held constant.

• A) $1 000 fall
• B) $4 000 fall
• C) $3 000 fall
• D) $3 000 increase

---

Definitions:

Perfectly Competitive

A market structure characterized by a large number of buyers and sellers, where no single entity can affect the price of the product.

Realizing Profits

The process by which a firm converts its operations and investments into financial gains or returns.

Economic Profits

The disparity between a company's overall income and its comprehensive economic expenses, accounting for both direct (explicit) and indirect (implicit) costs.

Purely Competitive

A market structure characterized by many sellers offering identical products, leading to no single seller influencing the market price.