Figure 2-7 Apple Recently Announced That the Company Is Exploring the Electric

question 138

Multiple Choice

Figure 2-7

Apple recently announced that the company is exploring the electric vehicle market, and is looking to produce vehicles as early as 2020.Assume Apple chooses to produce both traditional electric-engine vehicles and self-driving electric-engine vehicles.Figure 2-7 shows changes to its production possibilities frontier in response to new developments and different strategic production decisions.
-Refer to Figure 2-7.Assume that in response to changing consumer demands, Apple cuts back on the production of traditional vehicles and increases its production of self-driving vehicles.This strategy is best represented by the

• A)movement from E to F in Graph A.
• B)movement from J to G in Graph B.
• C)movement from L to K in Graph C.
• D)movement from H to J in Graph B.

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Definitions:

Variable Costs

Costs that change in proportion to the level of production or sales activity within a business.

Fixed Costs

Expenses that do not change with the level of production or sales over a certain period, such as rent, salaries, and insurance.

Variable Costs

Costs that vary in direct proportion to changes in levels of production or sales.

Fixed Costs

Expenses that do not change in proportion to the level of production or sales activities, such as rent, salaries, and insurance premiums.