The Contribution Margin Ratio of 40% Means That 60 Cents

question 131

True/False

The contribution margin ratio of 40% means that 60 cents of each sales dollar is available to cover fixed costs and to produce a profit.

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Definitions:

Recessionary Gap

A situation where an economy's real GDP is lower than its potential GDP, indicating underutilized resources and economic slack.

Price Level

The average of current prices across the entire spectrum of goods and services produced in the economy, often used in economic analysis and policy-making.

Expansionary Gap

A situation where the actual output of an economy exceeds its potential output, often leading to inflationary pressures.

Recessionary Gap

The situation where an economy's real GDP is less than its potential GDP, leading to underutilization of resources and unemployment.