Creating a Market That Was Previously Missing

question 89

Multiple Choice

Creating a market that was previously missing:

• A) redistributes surplus from buyer to seller.
• B) creates more total surplus.
• C) redistributes surplus from seller to buyer.
• D) redistributes surplus from a pre-existing market to the one that was previously missing.

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Definitions:

Sales Mix

The proportion of different products or services that a company sells, affecting its overall profitability due to varying margins.

Margin Of Safety

The difference between actual sales and break-even sales, indicating the amount by which sales can drop before the business incurs a loss.

Contribution Margin Ratio

A measure of the profitability of a product, defined as the difference between the sales price and variable costs, expressed as a percentage of sales price.

Operating Income

EBIT, or earnings before interest and taxes, denotes the income a business generates from its fundamental activities.