When most of a firm's costs are fixed over a wide range of outputs,the primary determinant of profitability will be the:
A)control the firm can exercise over costs.
B)amount of variable cost that can be recovered with the sale of each unit.
C)amount of revenue generated by sales.
D)marginal cost incurred in the production of a single unit.

Question

Quizplus · Accepted Answer

When most of a firm's costs are fixed over a wide range of outputs, the primary determinant of profitability will be the amount of revenue generated by sales. This is because the fixed costs remain constant regardless of the level of output, and the higher the revenue generated by sales, the higher the profit margin will be. Therefore, the firm must focus on maximizing its revenue to increase profitability.

When Most of a Firm's Costs Are Fixed Over a Wide