A Fear That Consumption of Ice Cream May Be Related

question 10

Multiple Choice

A fear that consumption of ice cream may be related to a life threatening disease spreads rapidly through France.The market result will be:

• A) the demand falls,price decreases and therefore French consumers buy more ice cream.
• B) the demand falls,price decreases and the quantity supplied therefore falls.
• C) a fall in demand followed by a fall in supply.
• D) the equilibrium quantity falls,but the price does not change.

---

Definitions:

Fixed Expenses

Costs that do not change with the level of production or sales over a certain period, such as rent or salaries.

Operating Leverage Factor

A measure that quantifies the proportion of fixed versus variable costs in a company's operating structure, indicating sensitivity to changes in sales volume.

Contribution Margin Ratio

The contribution margin ratio is the percentage of revenue that exceeds total variable costs, indicating how much of the sales revenue is available to cover fixed costs and generate profit.

Sales Dollars

The total revenue generated from the sale of goods or services, expressed in monetary units.