Suppose There Is a Permanent Shift of Consumer Preferences Away

question 52

Multiple Choice

Suppose there is a permanent shift of consumer preferences away from pretzels and toward potato chips. The most likely result would be

• A) in the short run, economic losses in the potato chip market.
• B) in the long run, a fall in the supply of potato chips.
• C) in the short run, a rise in the price of pretzels.
• D) short-run profits in the potato chip market increase.

---

Definitions:

Full Cost

The total cost of production that includes both direct and indirect costs, such as raw materials, labor, and overhead.

Return On Investment

A performance measure used to evaluate the efficiency or profitability of an investment or compare the efficiency of several different investments.

Total Variable Cost

The cumulative cost that varies directly with the level of production or sales volume.

Cost-Plus Pricing

A selling price determination approach where a fixed markup is added to the per unit cost of the product.