Jane Westerlund Owns a Picture-Framing Shop, the Caplow Co

question 123

Multiple Choice

Jane Westerlund owns a picture-framing shop, The Caplow Co. The average price she receives for a picture she frames for a customer is $120. This price must cover her average costs for a typical framed picture of $5 for glass, $2 for matting, and $13 for the frame, and $30 for the labour involved. She must also cover monthly expenses of $1,000 for rent and insurance, $200 for heat and electricity, $500 for advertising, and
$3,500 for her salary. Westerlund is considering buying an automatic mat-cutting machine in order to reduce the number of hours of direct labour required to produce a framed picture. In considering this purchase, she should recognize it will ________ Caplow's variable cost and ________Caplow's fixed cost.

• A)increase; decrease
• B)increase; increase
• C)decrease; increase
• D)decrease; decrease

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Definitions:

Information-processing theorists

Scholars who study how human beings process, store, retrieve, and use information, often drawing comparisons to computer processes.

Thought processes

The mental activities involved in understanding, reasoning, problem-solving, and decision-making.

Horizontal décalage

A concept in Piaget's theory referring to the observation that children can acquire similar cognitive skills at different times across different domains.

Multitasking

Cognitive processes involving attending and responding to multiple sources of information simultaneously.