If the Budget Line Rotates Inward and Becomes Steeper,there Is

question 125

Multiple Choice

If the budget line rotates inward and becomes steeper,there is a

• A) higher opportunity cost of the good measured on the x-axis.
• B) lower opportunity cost of the good measured on the x-axis.
• C) larger budget.
• D) higher price for the good measured on the y-axis.
• E) lower price for the good measured on the x-axis.

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Definitions:

CM Ratio

The CM Ratio, or Contribution Margin Ratio, is a financial metric that shows the proportion of sales revenue that exceeds variable costs, indicating the amount available to cover fixed costs and generate profit.

Fixed Expenses

Costs that remain constant for a set period and do not vary with changes in activity level, production volume, or sales, such as lease payments and utility bills. This is a rephrased definition of Fixed Costs.

Profit

The financial gain achieved when the amount of revenue gained from a business activity exceeds the expenses, costs, and taxes involved in sustaining the activity.

Contribution Margin

The difference between sales revenue and variable costs, serving as a measure to assess the profitability of products or services.