A fall in sales will generally cause:
A) initial decreases followed by increases in profit per unit of capital.
B) a decrease in profit per unit of capital.
C) no change in profit per unit of capital.
D) ambiguous effects on profit per unit of capital.
E) an increase in profit per unit of capital.

Question

Quizplus · Accepted Answer

A fall in sales will result in less revenue coming in, which ultimately leads to a decrease in profit. As a result, the profit per unit of capital will decrease.

A Fall in Sales Will Generally Cause