Jane Westerlund owns a picture-framing shop,The Caplow Co.The average price she receives for a picture she frames for a customer is $120.This price must cover her average costs for a typical framed picture of $5 for glass,$2 for matting,and $13 for the frame,and $30 for the labour involved.She must also cover monthly expenses of $1,000 for rent and insurance,$200 for heat and electricity,$500 for advertising,and $3,500 for her salary.Assuming everything else stays the same,if Jane Westerlund increased the average price charged for a framed picture,in a break-even chart this would cause the slope of the total revenue curve to _____ and the break-even quantity to ______.
A)increase; increase
B)increase; decrease
C)decrease; decrease
D)decrease; increase

Question

Quizplus · Accepted Answer

Increasing the average price charged for a framed picture would increase the slope of the total revenue curve, as revenue per unit sold would be higher. This would decrease the break-even quantity, as fewer units would need to be sold to cover fixed and variable costs.

Jane Westerlund Owns a Picture-Framing Shop,The Caplow Co