Which of the Following Is an Example of a Permanent

question 40

Multiple Choice

Which of the following is an example of a permanent resource price differential?

• A)When the price of oil increases, oil exploration increases.
• B)When the price of CDs falls, CD production decreases.
• C)When demand for land in a city increases, its price increases above prices of land elsewhere.
• D)When demand for computer programmers increased, more people went into that field.
• E)When the price of oil rose, demand for solar panels increased.

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Definitions:

Mixed Cost

Mixed cost includes both fixed and variable components, meaning part of the cost varies with the level of activity while the other part remains constant.

Overhead Costs

Expenses related to the operation of a business that are not directly associated with the production of goods or services, such as rent, utilities, and administrative salaries.

Machine Setups

The process of preparing and adjusting machines for a specific production run.

Fixed Manufacturing Cost

Costs that do not change with the level of production, such as salaries of permanent staff and rent for factory space.