material costs - VC 96 costs of services - VC labour costs - VC depreciation costs - FC other operating costs - FC 35 35 30 22 interest expenses - FC 12 extraordinary costs - FC 10 PROFIT -43 The loss would become smaller because of P > AVC. O Fixed costs need to be lowered so that price P becomes larger than AVC. The loss would become larger because of P < AC. The loss would become larger because of P < AVC.

ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
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The table below shows the firm's income statement. The business is obviously
generating a loss. How would the firm's decision to increase production and sales at
given prices impact the loss:
INCOME STATEMENT
185
REVENUES
sales revenues
financial revenues
extraordinary revenues
185
228
COSTS
material costs - Vc
costs of services - VC
96
35
labour costs - VC
35
depreciation costs - FC
other operating costs - FC
interest expenses - FC
extraordinary costs - FC
30
22
12
10
PROFIT
-43
Transcribed Image Text:The table below shows the firm's income statement. The business is obviously generating a loss. How would the firm's decision to increase production and sales at given prices impact the loss: INCOME STATEMENT 185 REVENUES sales revenues financial revenues extraordinary revenues 185 228 COSTS material costs - Vc costs of services - VC 96 35 labour costs - VC 35 depreciation costs - FC other operating costs - FC interest expenses - FC extraordinary costs - FC 30 22 12 10 PROFIT -43
material costs - VC
96
costs of services - VC
35
labour costs - VC
35
depreciation costs - FC
other operating costs - FC
30
22
interest expenses - FC
12
extraordinary costs - FC
10
PROFIT
-43
The loss would become smaller because of P > AVC.
Fixed costs need to be lowered so that price P becomes larger than AVC.
The loss would become larger because of P < AC.
The loss would become larger because of P < AVC.
Transcribed Image Text:material costs - VC 96 costs of services - VC 35 labour costs - VC 35 depreciation costs - FC other operating costs - FC 30 22 interest expenses - FC 12 extraordinary costs - FC 10 PROFIT -43 The loss would become smaller because of P > AVC. Fixed costs need to be lowered so that price P becomes larger than AVC. The loss would become larger because of P < AC. The loss would become larger because of P < AVC.
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