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

question 100

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. Assuming everything else stays the same, if Jane Westerlund increased the average price charged for a framed picture, in a break-even chart this would cause the slope of the total revenue curve to _________and the break-even quantity to __________.

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

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Definitions:

Strange Situation

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