The Figure Shows the Demand Curve for Gap Jackets (D)

question 93

Multiple Choice

The figure shows the demand curve for Gap jackets (D) , and Gap's marginal revenue curve (MR) , marginal cost curve (MC) , and average total cost curve (ATC) .
-In the figure above, what is Gap's markup?

• A) $50
• B) $15
• C) $35
• D) zero

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Definitions:

Variable Cost

Expenses that change in proportion to the level of production or sales in a company.

Fixed Cost

A cost that does not change with an increase or decrease in the amount of goods or services produced or sold.

Marginal Cost

The financial increase incurred by adding one more unit to the production of a product or service.

Short Run

A time period in economics during which at least one input (e.g., plant size, machinery) is fixed, affecting the firm's capacity to adjust production levels.