Dissaving Occurs When

question 107

Multiple Choice

Dissaving occurs when:

• A) Income is greater than saving
• B) Income is less than consumption
• C) Saving is greater than consumption
• D) Saving is greater than the interest rate

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Definitions:

Variable Costs

Costs that vary directly with the level of production or sales volume, such as raw materials or commission on sales.

Fixed Expenses

Costs that do not change with the level of production or business activity.

Unit Contribution Margin

The amount by which the selling price of a unit exceeds its variable costs, indicating how much it contributes to covering fixed costs and generating profit.

Fixed Expenses

Expenses that remain constant regardless of production or sales volume, including rent, salaries, and insurance.