If Demand Increases and the Price Doesn't Change, There Will

question 96

Multiple Choice

If demand increases and the price doesn't change, there will be a

• A)surplus.
• B)both a shortage and a surplus.
• C)shortage.
• D)neither a shortage nor a surplus.

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Definitions:

Fixed Expenses

Costs that remain constant regardless of the level of goods or services produced, such as salaries and rent.

Contribution Margin

The difference between sales revenue and variable costs, indicating how much revenue contributes towards covering fixed costs and generating profit.

Contribution Format

A type of income statement where costs are segregated into variable and fixed, highlighting the contribution margin.

Contribution Margin Ratio

The ratio of Contribution Margin to Sales Revenue, indicating the percentage of each sales dollar remaining after variable costs are deducted.