Which of the Following Statements Is True

question 25

Multiple Choice

Which of the following statements is true?

• A) The demand curve for a group of consumers in a market is simply the horizontal summation of each individual's demand.
• B) The single demand curve shows the quantity of a good that people will buy, allowing all factors (price, income, expected future prices, etc.) to vary.
• C) An increase in income will cause a person to move down and to the right along her demand curve.
• D) All of the above are true.

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Definitions:

Contribution Margin Ratio

A financial indicator demonstrating the proportion of sales income that is not absorbed by variable expenses, hence aiding in the coverage of fixed costs.

Fixed Monthly Expenses

Costs that do not vary in the short term, regardless of business volume or activity levels, and are incurred on a monthly basis.

Net Operating Income

The profit generated from a company's everyday business operations, calculated by subtracting operating expenses from revenue.

Contribution Format

A profit reporting format that separates fixed and variable costs, highlighting the contribution margin.