Suppose That People Decide Riding Scooters Is No Longer Fun

question 207

Multiple Choice

Suppose that people decide riding scooters is no longer fun.The equilibrium price of a scooter ________,and the equilibrium quantity of scooters ________.

• A) rises; increases
• B) rises; decreases
• C) falls; increases
• D) falls; decreases
• E) does not change; decreases

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Definitions:

Variable Costs

Expenditures that adjust based on the degree of operational activity or the volume of goods manufactured.

Fixed Costs

Fixed costs are business expenses that remain constant regardless of the level of production or sales activities.

Contribution Margin Ratio

A metric that shows what percentage of sales revenue is available to cover variable costs and contribute to fixed costs after all variable expenses have been covered.

Cost Structure

The composition of fixed and variable costs that a company incurs during the production of goods or services, affecting profitability.