The average price Washburn charges for a guitar is $329.This price must cover its average costs of $25 for materials and $112 for direct labour.It must also cover fixed expenses of $32,000.Assuming everything else stays the same,the company's planned move to Nashville,Tennessee,will reduce its fixed costs by $4,800.This would cause the slope of the total cost curve to _____ and the break-even quantity to _____.
A)decrease; stay the same
B)decrease; increase
C)increase; increase
D)stay the same; increase

Question

Quizplus · Accepted Answer

The slope of the total cost curve is determined by variable costs, which remain unchanged. The break-even quantity increases because fixed costs decrease, requiring more units to cover the remaining fixed costs.

The Average Price Washburn Charges for a Guitar Is $329