Aluminum Is an Important Input in the Production of Bicycle

question 151

Multiple Choice

Aluminum is an important input in the production of bicycle frames. If the price of aluminum decreases, all else being equal, what would we expect?

• A) the supply of bicycle frames to be unaffected
• B) the supply of bicycle frames to decrease
• C) the supply of bicycle frames to increase
• D) the supply of lead to increase

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Definitions:

Financial Advantage

A benefit in financial terms, often seen as an edge or superiority in financial health, resources, or opportunities.

Component

A part or element that combines with others to form a whole system or product.

Contribution Margin

The amount of revenue from sales that remains after variable costs are subtracted, useful in determining the profitability of individual products or services.

Annual Fixed Costs

The total fixed costs incurred by a business in a year, including rent, salaries, and insurance, which do not vary with production volume.