The Difference Between Sales Price Per Unit and Variable Cost

question 116

Multiple Choice

The difference between sales price per unit and variable cost per unit is the:

• A) Gross margin per unit.
• B) Contribution margin per unit.
• C) Fixed cost per unit.
• D) Gross profit from sales.
• E) Margin of safety per unit.

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Definitions:

Behavioral Economics

An area within economics that examines how psychological, cognitive, emotional, cultural, and social aspects influence the economic choices made by individuals and institutions.

System 1

A term from psychology, referring to the fast, automatic, and often subconscious way of thinking, as opposed to the slower, more deliberate thought processes of System 2.

System 2

A term often used in behavioral economics, referring to slow, deliberative, and analytical thinking, contrasted with fast, instinctive, and emotional 'System 1' thinking.

Neoclassical Assumption

Underlying principles of neoclassical economics that include rationality, individuals maximizing utility, firms maximizing profits, and markets tending toward equilibrium.