What Is the Maximum Percentage of Variable Costs in Relation

question 13

Multiple Choice

What is the maximum percentage of variable costs in relation to sales that a firm could experience and still break even with $5 million revenue,$1 million fixed costs,and $500,000 depreciation?

• A) 30 percent
• B) 70 percent
• C) 80 percent
• D) 90 percent

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Definitions:

Demand Curve

A graphical representation showing the relationship between the price of a good and the quantity demanded by consumers at various price levels.

Slopes Upward

Describes a line or curve on a graph that represents an increase in the variable on the y-axis as the variable on the x-axis increases, suggesting a positive relationship between the two variables.

Giffen Good

A product that experiences an increase in demand as its price rises, contrary to standard economic theory, due to its role as a staple good.

Income Increases

A situation where an individual's or household's earnings rise, leading to potential changes in spending behavior.