If There Is a Surplus of a Product, We Can

question 80

Multiple Choice

If there is a surplus of a product, we can conclude that

• A)the product's price is above equilibrium.
• B)the product's price is too low for equilibrium.
• C)quantity demanded exceeds quantity supplied.
• D)the product's price will rise.
• E)consumers want to buy more than is being made available by producers.

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Definitions:

Contribution Margin

The amount by which a product's selling price exceeds its total variable costs, used to cover fixed costs and contribute to net profits.

Variable Expense Ratio

A financial metric that represents the proportion of variable expenses to sales revenue, indicating how much variable costs change in response to sales activity.

Break-even Point

The level of production or sales at which total costs equal total revenue, resulting in no net loss or gain.

Degree of Operating Leverage

A measure indicating how much sales revenue will translate into changes in operating income due to the proportion of fixed and variable costs.