Assume That Selling Price Is Greater Than Variable Cost

question 29

Multiple Choice

Assume that selling price is greater than variable cost.Now suppose the selling price and the variable cost per unit increase by $5.00.What effect would these changes have on the contribution margin in dollars and on the contribution margin ratio?
Dollar contribution margin
Contribution margin ratio

• A) Increase
• Increase
• B) Decrease
• Decrease
• C) No change
• No change
• D) No change
• Decrease

Compare and contrast monopolistic competition with other market structures.

Understand the differences between monopolistic competition and perfect competition in terms of economic profits and points of production on the ATC curve.

Identify the reasons why monopolistic competitors and monopolists charge a price greater than the marginal cost of production.

Recognize the role of advertising in monopolistic competition to influence demand and address excess capacity.

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Definitions:

Price Paid

The actual amount of money exchanged for acquiring a good or service.

Resource Market

A market where raw materials, services, and other inputs required to produce goods and services are bought and sold.

Shift Resources

The reallocation of resources from one use to another, often in response to changing market conditions.

Human Capital

Human Capital is the value of the skills, knowledge, and experience possessed by an individual or population, viewed in terms of their contribution to the economy.