Higher contribution margins will generate higher profitability:

Question

Quizplus · Accepted Answer

Higher contribution margins will generate higher profitability only if the number of items sold does not decrease. If the increase in price leads to a decrease in the number of items sold, then the overall revenue may still decrease, despite the higher contribution margins. Therefore, it is important to find the balance between a higher contribution margin and maintaining the same or higher level of sales volume.

Higher Contribution Margins Will Generate Higher Profitability