Refer to the Above Graph

question 13

Multiple Choice

Refer to the above graph.It shows a firm that buys its inputs and sells its output in competitive markets.If the firm develops a new technology that increases labor productivity,the equilibrium level of employment for this firm is expected to be:

• A) L₀.
• B) zero.
• C) lower than L₀.
• D) higher than L₀.

---

Definitions:

Contribution Margin Ratio

The contribution margin ratio is a financial metric that measures the proportion of revenue that exceeds total variable costs, indicating how much of each sale contributes to covering fixed costs.

Profit-Volume Ratio

A financial tool used to analyze the relationship between profit and sales volume, showing the impact of sales changes on profits.

Unit Contribution Margin

The dollars available from each unit of sales to cover fixed costs and provide operating profits.

Break-Even Point

The level of operations at which a company’s revenues and expenses are equal.