There Is an Important Relation Between Contribution Margin and Profit

question 140

Multiple Choice

There is an important relation between contribution margin and profit.Which of the following statements is not true?

• A)As the number of units sold increases,total contribution margin increases,but fixed costs remain the same.
• B)As the number of units sold rises,profit increases by the additional contribution margin per unit.
• C)As the number of units sold increases,total contribution margin and fixed costs increase.
• D)As the number of

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Definitions:

Demand Price

The price at which consumers are willing to buy a specific quantity of a good or service at a given time.

Supply Price

The minimum price at which a producer is willing to sell a particular quantity of a good or service.

Price Ceiling

A legal maximum price that can be charged for a good or service.

Producer Surplus

The differentiation between the amount at which producers are content to sell a good or service and their actual revenue.