Figure 4-10 -Refer to Figure 4-10.Which of the Following Would Cause the Following

question 532

Multiple Choice

Figure 4-10

-Refer to Figure 4-10.Which of the following would cause the supply curve to shift from Supply B to Supply A in the market for tennis racquets?

• A) a decrease in the price of tennis balls
• B) an expectation by firms that the price of tennis racquets will increase in the very near future
• C) a decrease in the price of tennis racquet strings
• D) an improvement in technology that allows firms to use less labor in the production of tennis racquets

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Definitions:

Fixed Cost

Costs that remain constant regardless of the amount of goods produced or sold, including rent, wages, and insurance premiums.

Sunk Cost

Costs that have already been incurred and cannot be recovered or refunded, and should not influence future business decisions.

Average Fixed Cost

The cost incurred for fixed inputs (rent, salaries) divided by the quantity of output produced, which decreases as production increases.

Variable Cost

Costs that vary directly with the level of production or output, such as materials and labor, in contrast to fixed costs.