Price Levels Rarely Remain the Same

question 44

Multiple Choice

Price levels rarely remain the same.This implies that money is

• A)an excellent medium of exchange.
• B)divisible.
• C)a good medium for measuring value.
• D)an imperfect medium for storing value.

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Definitions:

Operating Leverage

A measure of how revenue growth translates into growth in operating income, determined by the proportion of fixed costs to variable costs.

Variable Costs

Costs that change directly in proportion to changes in the volume of production or activity level, such as raw materials, labor costs directly tied to production, and utility costs for manufacturing facilities.

Fixed Costs

Expenses that do not change in total despite changes in the volume of goods or services produced or sold.

Sales

The total revenue earned from selling goods or services over a specific period.