If the Cost of Producing a Good Rises for Sellers

question 206

Multiple Choice

If the cost of producing a good rises for sellers, then how will this affect the market equilibrium for that good?

• A) ​Price will rise and quantity will fall.
• B) ​Price will fall and quantity will rise.
• C) ​Price and quantity will both rise.
• D) ​Price and quantity will both fall.

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Definitions:

Graphical Approach

A method of solving problems or representing data using diagrams, charts, or graphs.

CVP Analysis

Cost-Volume-Profit Analysis, a management accounting methodology used for understanding the relationship between costs, volumes of sales, and profit.

Variable Cost

Costs that vary in proportion to the level of activity or volume of production in a business.

Annual Fixed Costs

Expenses that a business incurs that do not fluctuate with changes in production level or sales volume, such as rent or salaries, benchmarked on a yearly basis.