Which of the Following Statements Is true Regarding Profit Margin

question 209

Multiple Choice

Which of the following statements is true regarding profit margin?

• A)Profit margin can be improved by decreasing the gross profit rate and/or controlling operating expenses and other costs.
• B)Profit margin does not vary across industries.
• C)Discount stores with high merchandise turnover generally have higher profit margins.
• D)If the profit margin has a higher value, this suggests favorable return on each dollar of sales.

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Definitions:

Units of Output

The total quantity of goods or services produced by a firm or industry during a specific period.

Average Fixed Cost Curves

A graph representing the fixed costs of production (costs that do not change with the level of output) spread over varying levels of output, typically decreasing as output increases.

Marginal Cost Curve

A graphical representation showing the change in total cost that arises from producing one additional unit of a good or service.

U-Shaped

A descriptive term for a scenario where performance or conditions decline, then bottom out, and finally improve, thus resembling the letter "U".