Question

· Question 1

	The unit contribution margin (in the break-even analysis) refers to: The price of the product less its average variable cost The price of the product less its average fixed cost The price of the product less its marginal cost The price of the product less its average total cost

· Question 2

	When the firm produces at the loss-minimizing output, marginal profit is: Zero Positive Negative Can be positive, negative or zero

· Question 3

	When marginal profit is zero, Average profit: Equals marginal profit Is positive Is zero Can be positive, negative or zero

Answer 1

1) ans is C.

Unit contribution margin=Price-marginal cost

2)ans is A

marginal profit is zero because firm produces at a point where marginal revenue=marginal cost.

Thus marginal profit=0

3)ans is D

when marginal profit is zero then average profit can be negative, positive or zero as well because marginal profit=marginal revenue-marginal cost