Refer to the Graph

question 83

Multiple Choice

Refer to the graph. Economic output in year 0 is $20 billion. What is potential output in year 2?

• A)$20 billion
• B)$20.4 billion
• C)$20.8 billion
• D)$21.2 billion

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Definitions:

Operating Leverage

A financial metric that indicates how a company's operating income reacts to a change in sales volume, showing the degree of fixed versus variable costs.

Sales Increase

A rise in the amount of goods or services sold, often measured as a percentage increase over a previous period.

Contribution Format

A method of income statement presentation that stresses the contribution margin, which is sales revenue minus variable costs.

Income Statement

A financial statement that shows a company’s revenues and expenses over a specific period, resulting in net profit or loss.