If Sales Remain the Same and the Margin of Safety

question 19

Multiple Choice

If sales remain the same and the margin of safety increases, which of the following is true?

• A) The break-even point has decreased.
• B) The common fixed costs have increased.
• C) The break-even point has remained constant.
• D) Variable costs have increased.

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Definitions:

Industry Market Structure

Refers to the organization and characteristics of a particular market, including the number and size of firms, and the level of competition.

Imperfectly Competitive Markets

Markets in which individual sellers have some control over the price due to product differentiation, barriers to entry, or other factors, unlike in perfect competition.

Competition

Economic rivalry among businesses fighting for the same customers or markets, characterized by the struggle to attract customers, lower costs, and improve products and services.

Market Power

Refers to the ability of a company or firm to raise and maintain prices above the level that would prevail under competition.