Profit Margin Is Calculated by Dividing

question 34

Multiple Choice

Profit margin is calculated by dividing

• A)sales by cost of goods sold.
• B)gross profit by net sales.
• C)net income by equity.
• D)net income by net sales.

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Definitions:

Marginal Revenue

Marginal revenue is the additional income earned from selling one more unit of a good or service.

Marginal Cost

The change in total cost that arises when the quantity produced changes by one unit; essentially the cost of producing one additional unit of a good or service.

Price-Taker Firm

A firm that has no control over the market price and must accept the prevailing market price for its product.

Marginal Cost

The expense associated with manufacturing an extra unit of a product or service.