If total revenue stays the same and expenses increase, which of the following happens to net income?

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Multiple Choice

If total revenue stays the same and expenses increase, which of the following happens to net income?

Explanation:
Net income is revenue minus expenses. If total revenue stays the same and expenses increase, you’re subtracting a larger number from the same total, so the profit left over shrinks. For example, with revenue 100 and expenses 60, net income is 40; if expenses rise to 70, net income drops to 30. If expenses eventually exceed revenue, net income can become negative, but the immediate effect of increasing expenses at a fixed revenue is a decrease in net income.

Net income is revenue minus expenses. If total revenue stays the same and expenses increase, you’re subtracting a larger number from the same total, so the profit left over shrinks. For example, with revenue 100 and expenses 60, net income is 40; if expenses rise to 70, net income drops to 30. If expenses eventually exceed revenue, net income can become negative, but the immediate effect of increasing expenses at a fixed revenue is a decrease in net income.

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