​The General Rule to Increase Profits When Two Close Substitute

question 37

Multiple Choice

​The general rule to increase profits when two close substitute brands are jointly owned is

• A)​Increase prices for both brands
• B)Decrease prices for both brands
• C)Increase prices on one brand,decreasing it for the other
• D)​Increase prices on one brand,keeping the prices of the second brand constant

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Definitions:

Fixed Costs

Expenses that do not change with changes in the volume of production or sales, such as rent or salaries.

Contribution Margin

The difference between the sales revenue of a product and its variable costs, indicating how much contributes to covering fixed costs and generating profit.

Unprofitable Segment

An unprofitable segment is a division or part of a business that consistently generates losses instead of profits.

Net Income

The total profit of a company after all expenses and taxes have been subtracted from total revenue.