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Let's say for example that the business is taking in $2000 of revenue. That is the amount that the business collected for it's services - like for fixing the computer. What if though it costs $500 for the equipment (that's an expense). Now they only made $1500. Now the customer complains and says that the computer isn't fixed properly so the company sends out a techie for 2 additional hours. They need to pay their employee (another expense). Now the $1500 is down to $1400. They would have utilities to keep their lights on and insurance and many other expenses.
Your profit looks like this:
Profit = Revenue - Expenses
Answer:
An incurred cost that cannot be recovered, which is irrelevant for all decisions about the future, is included in the projected cost of a project. According to "Thinking Like an Economist," this an example of:<u> Failing to ignore sunk costs</u>
Explanation:
A sunk cost is a cost that cannot be recovered or changed and is independent of any future costs a business may incur. Since decision-making only affects the future course of business, sunk costs should be irrelevant in the decision-making process
Answer:
MARKET PARTICIPATION.
Explanation:
<em>Because this way the firm size can stay constant or contract even if the company increases its revenues. Information technology helps firms contract in size because it can reduce transactions costs. According to the transaction cost theory, firms and individuals seek to economize on transaction costs, much as they do on prodcution costs. For instance, by using computer links to external suppliers, the Chrylser Corporation can achieve economies by obtaining more than 70 percent of its parts from other companies.</em>
