Refer to Figure 2

question 62

Multiple Choice

Refer to Figure 2.2.Which diagram represents the effect of a lower gasoline price on the supply of gasoline?

• A) A
• B) B
• C) C
• D) D

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Definitions:

Variable Costs

Expenses that fluctuate in proportion to the activity of a business.

Activity Level

A measure of the volume of production or operations, often influencing costs and revenues in a business.

Fixed Cost Per Unit

The total fixed costs divided by the number of units produced, indicating how much each unit needs to contribute to fixed costs.

Level of Activity

A measure of the volume of production, operation, or work undertaken by a business or facility within a particular time period.