Which Scenario Is the MOST Likely Effect of a Decrease

question 15

Multiple Choice

Which scenario is the MOST likely effect of a decrease in the price of tablet computers on the market for laptop computers (a substitute) ?

• A) increased equilibrium price and decreased equilibrium quantity
• B) decreased equilibrium price and decreased equilibrium quantity
• C) increased equilibrium price and increased equilibrium quantity
• D) decreased equilibrium price and increased equilibrium quantity

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Definitions:

Fixed Cost

A cost that does not change with the level of output or sales over a certain period, such as rent or salaries.

Sales Volume

The quantity of units sold by a company within a specific time period.

High-low Method

A technique used in cost accounting to estimate variable and fixed costs based on the highest and lowest levels of activity.

Mixed Cost

A cost that contains both variable and fixed cost elements, changing with the level of output but not in direct proportion.