The average price Washburn charges for a guitar is $349. This price must cover its average costs of $25 for direct materials and $120 in direct labour. It must also cover fixed expenses of $38,000. 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 $349. This price must cover its average costs of $25 for direct materials and $120 in direct labour. It must also cover fixed expenses of $38,000. 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 $349. This price must cover its average costs of $25 for direct materials and $120 in direct labour. It must also cover fixed expenses of $38,000. 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.

stay the same



decrease


D.

stay the same



increase



Answer: C


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