The Improvement in Labor Made Possible by Education and Knowledge

question 42

Multiple Choice

The improvement in labor made possible by education and knowledge that is embodied in the work force is known as _____ capital.

• A) physical
• B) human
• C) financial
• D) real

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Definitions:

Contribution Margin Ratio

A financial metric that shows what percentage of sales revenue is available to cover fixed costs and generate profit.

Variable Costs

Costs that change in proportion to the level of activity or volume of production, such as raw materials and labor expenses.

Fixed Costs

Expenses that do not change with the level of production or sales, such as rent, salaries, and insurance, offering predictability in budgeting.

Operating Leverage

A measure of the relative mix of a business’s variable costs and fixed costs, computed as contribution margin divided by operating income.