When Voluntary Exchange Takes Place, Neither Party Gains from the Exchange

question 75

True/False

When voluntary exchange takes place, neither party gains from the exchange.

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Definitions:

Contribution Margin

the difference between the sales revenue of a product and its variable costs; used to cover fixed costs and generate profit.

Variable Costs

Expenses that change in proportion to the amount of goods produced or sold, like labor and material costs.

Contribution Margin

The amount remaining from sales revenue after variable expenses have been deducted, indicating how much revenue is available to cover fixed costs and generate profit.

Variable Costs

These are expenses that vary directly with the level of production or sales volume; they rise as production increases and fall as production decreases.