The Larger the Share of a Good in a Consumer's

question 163

Multiple Choice

The larger the share of a good in a consumer's budget, holding everything else constant, the

• A)more price elastic is a consumer's demand.
• B)more vertical is a consumer's demand curve.
• C)more price inelastic is a consumer's demand.
• D)more unit elastic is a consumer's demand.

---

Definitions:

Zero Profit

A situation where a business's revenues exactly match its expenses, resulting in no net profit.

Unit Contribution Margin

The difference between the selling price per unit and the variable cost per unit, indicating how much each unit contributes to covering fixed costs.

Fixed Costs

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

Contribution Margin Ratio

A financial metric that shows the portion of sales revenue that is not consumed by variable costs and therefore contributes to covering fixed costs.