In Figure 5

question 37

Multiple Choice

In Figure 5.8, if the supply curve moves from S4 to S5

• A)The firm will make a smaller economic profit than they used to
• B)The firm will go from making an economic profit to a normal profit
• C)The firm will go from making a loss to a bigger loss that is big enough to make it want to shutdown,
• D)The firm will go from making a loss to a bigger loss but one that is not big enough to make it want to shutdown.

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Definitions:

CVP Analysis

Cost-Volume-Profit Analysis, a tool that helps understand the relationship between costs, volume of sales, and profit.

Sales Mix

The combination of products or services a company sells, often analyzed to assess profitability and resource allocation.

Variable Costs

Costs that vary in relation to a company's operational activities.

Break Even

The point at which total costs and total revenues are equal, resulting in no net loss or gain for the business.