Which Of The Following Will Increase The Break Even Quantity
Question: Which of the following will increase the break-even quantity?
A decrease in overall fixed costs
b. A decrease in the marginal costs
c. A decrease in the price level
d. An increase in price level
Answer: c. A decrease in the price level
An increase in the break-even quantity implies that it takes you longer (need to produce and sell
more units) before you can break even. In that case, an increase in FC, an increase in MC, or a
reduction in price will cause the break-even quantity to increase.
Question:
Answer: b. the more value individuals place on current dollars
c. less investments will take place
Question:
Answer:
Question:
Answer: a. 5
$500 + $50 x Q = $250 + $100 x Q
Q = 5 units. If you expect to sell more than 5 units use the high-FC/Low-MC technology, if less than 5,
use the low-FC/high-MC technology
Question: What is the net present value of a project that requires a $100 investment today and returns $50 at the
end of the first year and $80 at the end of the second year? Assume a discount rate of 10%.
a. $10.52
b. $11.57
c. $18.18
d. $30.00
Answer: b. $11.57
-$100 + $50/1.1 + $80/1.1^2 = $11.57
Question: You expect to sell 500 cell phones a month, which have a marginal cost of $50. If your fixed costs are
$5,000 per month, what is the break-even price?
a. $10
b. $50
c. $60
d. $100
Answer: c. $60
At this point, all your costs are avoidable. Thus,
[$5,000 + $50 x 500]/500 = $60
Question:
Answer: d. 17,500
FC / (P - MC) = $350,000 / ($100 - $80) = 17,500
Question: Which of the following is NOT true if a firm shuts down and produces zero output in the short run?
a. Variable costs will be zero.
b. Losses will be incurred.
c. Fixed costs will be greater than zero.
d. Fixed costs will be less than zero.
Answer: d. Fixed costs will be less than zero.
Question: What are some of the solutions for a hold-up problem?
a. Mergers
b. Contracts
c. Exchange of ‘hostages’
d. All the above
Answer: d. All the above
Question: Which of the following is classified as a sunk cost?
a. Cost of the next best alternative
b. Additional cost of producing an additional unit
c. Research costs to determine the implementation of a technology
d. Total cost of producing a product
Answer: c. Research costs to determine the implementation of a technology