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Economic Theory
True-False Questions
1. Fixed expenses do not change in total when there is a modest
change in sales.
2. Property taxes and rent are often fixed expenses.
3. Variable expenses change in total as volume changes.
4. Break-even point is the point where revenues equal the total of all
expenses including the cost of goods sold.
5. Decreasing a company’s fixed expenses should reduce the break-
even point.
6. If a company requires a profit of $30,000 (instead of breaking
even), the $30,000 should be combined with the fixed expenses in order to
compute the point at which the company will earn $30,000.
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