The Below Indifference Map Shows the Various Combinations of Hours

question 89

Multiple Choice

The below indifference map shows the various combinations of hours of music and apples that yield different levels of utility.Figure 7.1

-Suppose a budget line is drawn with X on the horizontal axis and Y on the vertical axis. A decrease in the price of X will cause:

• A)an increase in the vertical intercept and no change in the horizontal intercept.
• B)a decrease in the vertical intercept and no change in the horizontal intercept.
• C)an increase in the horizontal intercept and no change in the vertical intercept.
• D)a decrease in the horizontal intercept and no change in the vertical intercept.
• E)a parallel, rightward shift of the budget line.

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Definitions:

Period Costs

Expenses that are not directly tied to the production process and are expensed in the period in which they occur, such as selling and administrative expenses.

Contribution Margin

The difference between sales revenue and variable costs of a product or service, indicating how much contributes to covering fixed costs and generating profit.

Direct Manufacturing Cost

Expenses directly tied to the production of goods, including materials and labor costs.

Indirect Manufacturing Costs

Expenses related to the production process that cannot be directly traced to individual products, such as utilities or salaries for management.