ManEcon

true

The NPV rule states that if the present value of the net cash flow of a project is larger than zero, the project does earn economic profit.

false

Some companies do not use NPV because this is not the correct way in analyzing investments.

false

More companies are using break-even analysis than NPV because break-even analysis is easier and more intuitive.

true

The break-even quantity is equal to the fixed cost divided by the contribution margin.

true

More companies are using break-even analysis than NPV because break-even analysis is easier and more intuitive.

true

 Sunk costs are vulnerable to post-investment hold-ups.

true

The break-even price is the average avoidable cost.

false

If you expect to sell less than the break-even quantity, then your investment is profitable.

false

All investments represent a trade-off between possible current gain and future sacrifice.

true

Vertical integration refers to the common ownership of two firms in separate stages of the vertical supply

false

The formula for computing the Break-even Volume is Fixed Costs divided by the CM%.

false

Break-even Sales is equal to Sales Minus Fixed Costs

true

The average cost is irrelevant to an extent decision.

false

Sell more if MR < MC.; sell less if MR > MC.

false

An incentive compensation scheme that increases marginal revenue or reduces marginal cost will decrease effort.

false

Variable costs are also called overhead.

true

Profits are optimized when MR=MC.

true

Average costs often decrease as quantity increases due to the presence of fixed costs (FC).

false

All investments represent a trade-off between possible current gain and future sacrifice.

false

Opportunity cost is anything of value foregone or sacrificed to attain an objective

false

Sunk cost is referred to as historical cost and is therefore relevant in the decision-making process.

true

lf taking a step provides less benefit than cost, take a step backward. If not, step forward.

false

When fixed cost is greater than contribution margin surely there would be profit.

incremental

When economists speak of “marginal”, they mean