The Contribution Margin Ratio Always Increases When Which of the Following

question 111

Multiple Choice

The contribution margin ratio always increases when which of the following occurs?

• A) Variable expenses as a percentage of sales increase.
• B) Variable expenses as a percentage of sales decrease.
• C) Break-even point increases.
• D) Fixed Costs increase.

---

Definitions:

Economists

Experts or professionals who study, develop, and apply theories and concepts in economics to analyze how societies utilize scarce resources.

Monopoly

A market condition where a single firm has exclusive control over a product or service, eliminating competition.

Negative Externalities

Adverse effects suffered by a third party or the public as a result of an economic transaction or activity.

Principal-Agent Problem

At a firm, a conflict of interest that occurs when agents (workers or managers) pursue their own objectives to the detriment of the principals’ (stockholders’) goals. In public choice theory, a conflict of interest that arises when elected officials (who are the agents of the people) pursue policies that are in their own interests rather than policies that would be in the better interests of the public (the principals).