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If Greg Uses a Special Glue to Make Model Planes

question 36

Multiple Choice

If Greg uses a special glue to make model planes that he sells and the price of his model planes increases,then one would expect that the equilibrium price of the special glue would _______ and the equilibrium quantity would _________.


Definitions:

Contribution Margin

The amount remaining from sales revenue after variable expenses have been deducted, indicating how much contributes to covering the fixed costs.

Break-even Sales

The amount of revenue needed to cover both fixed and variable costs, resulting in no profit or loss.

Variable Cost

Costs that change in proportion to the level of goods or services produced, such as materials and labor directly involved in production.

Operating Leverage

A measure of how revenue growth translates into growth in operating income, indicating the degree to which a company can increase profits by increasing sales.

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