The Marginal Income Associated with a Unit of Input Is

question 34

Multiple Choice

The marginal income associated with a unit of input is found by

• A) multiplying the additional output produced by the unit of input and the additional revenue generated per unit of physical output.
• B) dividing total income generated by the number of units of output produced.
• C) multiplying the price that the good sells for by the additional revenue generated per unit of physical output.
• D) dividing the change in output produced by the change in units of the input employed.

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Definitions:

Fixed Expenses

Costs that do not vary with changes in production volume or sales, such as rent, salaries, and insurance.

Profit

The financial gain realized when the revenue generated from a business activity exceeds the costs, expenses, and taxes needed to sustain the activity.

Contribution Margin Ratio

A financial metric that shows the percentage of sales revenue that remains after variable costs are subtracted.

Fixed Monthly Expenses

Recurring costs that do not vary in total within a given period, such as rent, salaries, and insurance premiums, irrespective of the level of business activity.