Refer to the Figure Below

question 120

Multiple Choice

Refer to the figure below. Based on the Keynesian cross diagram, at short-run equilibrium output,

• A)there is a recessionary gap.
• B)there is an expansionary gap.
• C)output equals potential output.
• D)firms will be producing more than they can sell.

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Definitions:

Fixed Expenses

Costs that do not change with the level of production or sales, remaining constant over a specified period.

Contribution Margin Ratio

A financial metric that measures the proportion of revenue remaining after variable costs have been deducted, indicating how much revenue is available to cover fixed costs and generate profit.

Fixed Expenses

Costs that do not change with the level of production or sales over a short period, such as rent, salaries, and insurance.

Sales Mix

The combination of products or services that a company sells, typically influencing the company's profits and strategy.