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Business
To generate higher profit margins, producers must work to
increase their total supply.
increase their total expenses.
decrease their customer base.
decrease their production costs.
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Best Answer

The option (d) is correct. In order to generate higher profit margins, producers must work to decrease their production cost.

Further Explanation:

Profit Margin is a measure of the profitability of the company. It is computed as the net profit as a percentage of the sales. The higher profit margin results from an increase in sales revenue or a decrease in production cost.

The increase in total supply does not result in the revenue of the company. It only means more products are available to the customers. So, it will not result in higher profit margins.

The increase in total expense and decrease in the customer base will reduce the net profit, thereby reducing the profit margin.

Therefore, Option (d) is correct because a decrease in production cost will increase the net profit, thereby generating a higher profit margin.

Answer details:

Grade: Middle School

Subject: Accounting  

Chapter: Financial statement Analysis

Keywords: Profit Margin, total supply, production cost, total expense, customer base, producer, net profit, sales, to generate higher profit margins, decrease in production cost, increase in in total expense, decrease in customer base, increase in total supply.

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