When There Are _____ Inputs Required to Produce a Given

question 9

Multiple Choice

When there are _____ inputs required to produce a given output, the efficiency is _____ and the cost of outputs is _____.

• A)more; higher; lower
• B)fewer; higher; lower
• C)more; lower, lower
• D)fewer; lower; higher
• E)fewer; lower; lower

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Definitions:

Fixed Overhead

Costs that do not change with the level of production or sales, including expenses such as rent, salaries, and insurance, which are incurred regardless of business activity levels.

Contribution Margin Ratio

The percentage of sales revenue that exceeds variable costs, indicating the portion contributing to fixed costs and profit.

Selling Price

The amount a customer pays to purchase a product or service from a business.

Operating Leverage

A measure of how revenue growth translates into growth in operating income, due to fixed costs in a company's structure.