The Contribution Margin Per Unit Is Calculated as the Difference

question 71

Multiple Choice

The contribution margin per unit is calculated as the difference between

• A) sales revenue per unit and fixed cost per unit.
• B) sales revenue per unit and variable cost per unit.
• C) sales revenue per unit and product cost per unit.
• D) fixed cost per unit and variable cost per unit.

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Definitions:

External Costs

Costs that are not borne by the parties involved in an economic transaction but are imposed on other individuals or society at large, such as pollution or congestion.

Coase Theorem

A principle suggesting that if transaction costs are low, private bargains will efficiently resolve the allocation of resources and distribution of goods.

Zoning Ordinance

Legislation that divides an area into zones to specify allowable land uses and regulate building standards, to shape urban growth and land use.

Socially Optimal

A situation in which resources are allocated in the most efficient manner from the perspective of society as a whole.