Use the table below to answer the following questions.
Table 3.5.4
Quantities demanded and supplied in equilibrium
before and after a drought strikes potato farms
-In Table 3.5.4 potatoes and rice are
Definitions:
Fixed Cost
Fixed expenditures, including rent, salaries, and insurance, that are unaffected by changes in production or sales volumes.
Contribution Margin Ratio
A measure indicating the percentage of each sales dollar that contributes to covering fixed costs and generating profit, calculated as (Sales Revenue - Variable Costs) / Sales Revenue.
Fixed Costs
Costs that do not vary with the level of production or sales, such as rent, salaries, and insurance premiums, providing predictability in budgeting.
Break Even
It is the point at which total costs and total revenues are equal, meaning there is no profit or loss.
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