The Supply Curve of a Good Slopes Upward to the Right

question 42

Multiple Choice

The supply curve of a good slopes upward to the right because of

• A)technological improvements over time.
• B)the law of supply.
• C)the law of demand.
• D)the existence of substitutes in production.
• E)the fact that prices tend to rise over time.

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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.