Two Firms,STM and VPL,have the Same Contribution Margin but VPL's

question 32

Multiple Choice

Two firms,STM and VPL,have the same contribution margin but VPL's fixed costs (including interest) are greater than STM's.The sales and tax rates of the two firms are the same.We would expect:

• A) VPL's income to have the same variability as STM
• B) VPL's income to be less variable than STM
• C) VPL's income to be more variable than STM
• D) Can't determine with the information provided

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Definitions:

Frictional Unemployment

Temporary unemployment existing in a job market due to time taken by workers to move between jobs, including new or re-entering workers.

Structural Unemployment

Unemployment arising from a persistent mismatch between the skills of workers and the requirements of jobs, often exacerbated by technology or market changes.

Frictional Unemployment

Temporary unemployment experienced by individuals transitioning between jobs, seasons, or moving to new locations.

Surplus

The situation in which the quantity of a good or service supplied exceeds the quantity demanded.