Assuming there is no change in a product's price or the quantity demanded, if a business owner wants to increase her advertising expenses to $500 monthly, this would cause total costs to ________ and the break-even quantity to ________.
A) decrease; stay the same
B) increase; increase
C) decrease; increase
D) stay the same; increase
E) stay the same; decrease

Question

Quizplus · Accepted Answer

Increasing advertising expenses will increase total costs, and since the price and quantity demanded remain unchanged, the break-even quantity will also increase to cover the higher costs.

Assuming There Is No Change in a Product's Price or the Quantity