If Consumers Spend 85 Cents Out of Every Extra Dollar

question 4

Multiple Choice

If consumers spend 85 cents out of every extra dollar received,the:

• A) MPC is 0.85.
• B) MPC is 0.15.
• C) MPC is 6.67.
• D) MPS is 0.85

---

Definitions:

Gross Margin

The difference between the sales revenue and the cost of goods sold, which shows the profitability of a company’s core activities.

Selling

The process of promoting and transferring ownership of goods or services to customers.

Administrative Expenses

Costs related to the general administration of a business, such as salaries of executive officers, legal and office supplies.

Budgeted Sales

The projected amount of sales, in units or dollars, a company expects to achieve in a specific period.