Contribution Margin Is Equal to Fixed Costs at the Break-Even

question 89

True/False

Contribution margin is equal to fixed costs at the break-even point.

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Definitions:

Economically Efficient

A state where resources are allocated in a way that maximizes the production of goods and services, with no way to improve someone's condition without worsening another's.

Coase Theorem

A principle stating that if property rights are well-defined and transaction costs are low, parties will negotiate to correct externalities without government intervention.

Transaction Costs

Expenses incurred during the process of buying or selling goods and services that are not directly related to their price.

Negative Externality

A cost that is suffered by a third party as a result of an economic transaction.