According to the Graph Shown, If the Market Is in Equilibrium

question 6

Multiple Choice

According to the graph shown, if the market is in equilibrium, producer surplus is:

• A) $30.
• B) $20.
• C) $50.
• D) $60.

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Definitions:

Variable Expense Ratio

A ratio computed by dividing variable expenses by sales.

Operating Leverage

A financial concept that measures the proportion of fixed costs in a company's cost structure, indicating its sensitivity to changes in sales volume.

Contribution Margin

The difference between sales revenue and variable costs, indicating how much revenue contributes to covering fixed costs and generating profit.

Net Operating Income

A measure of the profitability of a business's core operational activities, excluding any income or expenses not directly related to its main operations.