According to the Table Shown, What Can Be Said About

question 88

Multiple Choice

According to the table shown, what can be said about the cost of living in 2011?

• A) It increased 5.3 % from the previous year, and consumers were worse off if their nominal income did not change.
• B) It increased by 5.0 % from the previous year, and consumers were better off if their nominal income did not change.
• C) It is the base year, so no comparisons can be made in this year.
• D) It is the base year, so the cost of the basket of goods did not change.

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Definitions:

Contribution Margin Ratio

The percentage of each sales dollar remaining after variable costs have been deducted, indicating how much contributes to fixed costs and net profit.

Unit Contribution Margin

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

Degree of Operating Leverage

A financial ratio that measures the percentage change in operating income in response to a percentage change in sales.

Forecasted Contribution Margin

An estimated metric that indicates the difference between sales revenue and variable costs of goods sold, used to predict the profitability of sales.