When the Price Rises and the Supply Curve Does Not

question 176

Multiple Choice

When the price rises and the supply curve does not shift,the firms' producer surplus ________.When the price falls and the supply curve does not shift,the firms' producer surplus ________.

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

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Definitions:

Selling Price

The amount a seller charges for a product or service.

Contribution Margin

The amount by which the sales revenue of a product exceeds its variable costs, indicating the contribution towards fixed costs and profits.

Manufacturing Overhead Cost

Indirect costs related to manufacturing that cannot be traced directly to individual products, such as maintenance and factory manager salaries.

Produced Units

The total number of items manufactured by a company during a specific period.