Use the Following to Answer Question

question 224

Multiple Choice

Use the following to answer question:
-(Figure: Four Markets for Online Movie Rentals) Use Figure: Four Markets for Online Movie Rentals.Which of the graphs illustrates what may happen in the market for online movie rentals if D₁ or S₁ is the original curve and D₂ or S₂ is the new curve and if the cost to the firm of producing online movie rentals falls?

• A)A
• B)B
• C)C

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Definitions:

Contribution Margin

The amount by which a product's sales price exceeds its variable costs, indicating how much contributes to covering fixed costs and generating profit.

Machine Hour

A measurement of production time, counting one hour of operation of a machine or a piece of equipment for manufacturing purposes.

Sales Margin

The difference between the selling price of a product and the cost of goods sold, expressed as a percentage of sales, indicating the profitability of a product.

Fixed Costs

Expenses that do not change with the level of output or sales, such as rent, salaries, and insurance premiums.