Correct Answer: A

Choice "a" is correct. Only I.

Choices "b", "c", and "d" are incorrect, since II is a disadvantage - not a benefit.

Correct Answer: C

Choice "c" is correct. One of the consequences of greater government regulation of certain products is the

resulting higher cost to the consumer when the government imposes health and safety regulations on

certain products it is likely that expenses will increase and that the added costs will be passed on to

consumers in terms of higher prices. The total output for the product may decrease.

Choice "a" is incorrect. Since the price goes up, consumption will decrease.

Choice "b" is incorrect. The price can be expected to increase (see choice "c" above).

Choice "d" is incorrect. Since the price goes up, supply goes down.

Correct Answer: C

Choice "c" is correct. Goods that are important for a comfortable life-style would be relatively price

insensitive (i.e., inelastic). For example, demand for electricity would only decrease if there were an

enormous increase in price (people might then use other forms of energy - such as solar). Only goods that

are absolute necessities (a theoretical example is water) have perfectly inelastic demand curves.

That is, no matter what price is charged, people will still buy the product because they need it to stay alive.

Choices "a", "b", and "d" are incorrect, per for choice "c" above.

Correct Answer: A

Choice "a" is correct. Setting the overall goals of the firm is usually the starting point in strategic planning. Choice "b" is incorrect. The organizational structure will be partially determined by the goals of the firm. Choice "c" is incorrect. Recent annual budgets may be reviewed as an aid in planning, but they are not the first consideration in strategic planning. In fact, they often are ignored. Choice "d" is incorrect. Being an industry leader may be or become a goal of the firm, but that would be determined during the strategic planning process.

Correct Answer: A

Choice "a" is correct. Absorption costs are not relevant in situations when management must decide on accepting or rejecting one-time-only special orders, and where there is sufficient idle capacity. All of the following costs are relevant in such situations:

B. Direct costs

C. Variable costs

D. Incremental costs