Which of the following best describes margin?

Margin is best described as the difference between the selling price of a product and its cost, often expressed as a percentage of the selling price. This means that margin gives insight into profitability relative to the selling price, allowing a business to determine how much of the selling price contributes to profit after accounting for costs.

This percentage form helps businesses set pricing strategies, evaluate the overall financial health, and assess how much they retain from sales after covering expenses. Understanding margin in this context is crucial for making informed pricing, production, and sales decisions.

The other options do not accurately reflect the concept of margin. Margin is not always a fixed amount; it can fluctuate based on various factors like costs and selling price adjustments. While it relates to costs, it does not solely focus on total costs, as it involves the selling price as well. Lastly, margin typically does not decrease with rising prices; instead, a well-managed price increase can lead to a higher margin, unless costs also rise proportionately.