Which of the Following Statements Is True When Making Decisions

question 89

Multiple Choice

Which of the following statements is true when making decisions using cost-volume-profit (CVP) analysis?

• A) As long as the contribution margin is a positive number, net operating income will be positive.
• B) As long as variable costs are more than fixed costs, net operating income will be negative.
• C) As long as the contribution margin is greater than fixed costs, net operating income will be positive.
• D) As long as the sales price per unit is greater than fixed costs per unit, net operating income will be positive.

---

Definitions:

Automatic Stabilizer

Economic policies and programs, such as unemployment insurance and progressive taxes, that automatically help stabilize an economy by reducing the severity of economic fluctuations without additional government intervention.

Disposable Income

The residual financial power of households for savings and consumption post the subtraction of income taxes.

Inflationary Pressure

Situations where upward trends in prices are predicted due to factors such as increased production costs or rising demand.

Classical Economists

Refers to economists from the 18th and early 19th centuries who focused on economic growth, free markets, and the importance of limited government intervention.