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 _____.

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 _____.

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



Answer: D


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