If Contribution Margin Decreases by $1 Per Unit, Then Operating

question 155

True/False

If contribution margin decreases by $1 per unit, then operating profits will increase by $1 per unit.

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Definitions:

Industry Elastic

The responsiveness of the quantity demanded or supplied of goods or services in an industry to changes in price.

Differentiated Product

A product that is distinct from its competitors because of features, branding, quality, or other attributes that make it unique in the eyes of consumers.

Purely Competitive Industry

An industry structure characterized by many small firms producing identical products with no single firm able to influence market prices.

Nonprice Competition

Strategies companies use to attract customers that do not involve changing the price of goods or services, such as advertising and product differentiation.