A Company Earned $2,000 in Net Income for October

question 182

Multiple Choice

A company earned $2,000 in net income for October. Its net sales for October were $10,000. Its profit margin is:

• A) 2%.
• B) 20%.
• C) 200%.
• D) 500%.
• E) $8,000.

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Definitions:

Output

The total amount of goods or services produced by a firm or economy.

Total Revenue

The total amount of money a company receives from its business activities before any expenses are subtracted, calculated by multiplying the price per unit by the quantity sold.

Total Cost

The complete cost of production, including both fixed and variable costs.

Quantity Effect

Refers to the change in consumer behavior resulting from a change in the price of a product, where the quantity demanded increases as the price decreases and vice versa.