All other things equal, an increase in the number of units sold will

Question

Quizplus · Accepted Answer

An increase in the number of units sold leads to an increase in total contribution margin because the company is selling more units and earning more revenue. The increase in sales volume can also lead to economies of scale, which can reduce unit variable cost and fixed cost per unit, and make it more feasible to reduce the unit sales price. However, these effects are not guaranteed and depend on the nature of the product and the industry. Therefore, the safest answer is C, which states that an increase in the number of units sold will increase total contribution margin.

All Other Things Equal, an Increase in the Number of Units