Nerf Mania Reports Net Income of $500,000,net Sales of $4,000,000,and

question 65

Multiple Choice

Nerf Mania reports net income of $500,000,net sales of $4,000,000,and average assets of $2,000,000.The profit margin is:

• A)12.5%.
• B)25%.
• C)50%.

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Definitions:

Deadweight Losses

Economic inefficiencies that occur when the market equilibrium is not achieved, often due to external interference such as taxes or monopolies, resulting in a loss of total surplus.

Distort Incentives

When external factors or policies alter the natural motivations that influence individual or business decisions, potentially leading to inefficient outcomes.

Revenue

The income generated from normal business operations and before any expenses are deducted.

Excise Tax

A tax imposed on specific goods, services, or activities, such as gasoline, cigarettes, or gambling, usually intended to discourage their use or to raise revenue.