The Skyways Company Is Currently Selling Its Single Product for $15

question 106

Multiple Choice

The Skyways Company is currently selling its single product for $15. Variable costs are estimated to remain at 70% of the current selling price and fixed costs are estimated to be $4,800 per month. If Skyways increases its selling price by 10%, its variable cost ratio will:

• A) not change.
• B) decrease.
• C) increase.
• D) Cannot determine with the information given.

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Definitions:

Rational Decision Maker

A theoretical entity in economics and decision theory that systematically and logically evaluates options before making a choice.

Rational Choice

The theory that individuals make decisions based on the maximization of their benefits and the minimization of their costs.

Subjective Costs

Costs perceived by individuals based on personal values, preferences, and circumstances, which can vary between persons.

Personal Interests

involve the hobbies, preferences, or passions of an individual, which can influence their choices and behavior.