An Increase in the Demand for a Product Will Cause

question 214

Multiple Choice

An increase in the demand for a product will cause output to

• A) increase and both the demand for and prices of the resources used to produce the product to increase.
• B) increase and both the demand for and prices of the resources used to produce the product to decrease.
• C) decrease; the demand for the resources used to produce the product will remain constant.
• D) decrease; the price of resources used to produce the product will decrease.

Grasp the concept and calculation of contribution margin and contribution margin ratio.

Understand how changes in sales volume, prices, and costs affect net income.

Learn to calculate and interpret the degree of operating leverage.

Apply concepts of break-even and profitability analysis to decision-making, including special orders.