Question

Suppose you are in the T-shirt business. The cost of your ink supplies increases as the quantity of T-shirts produced decreases. This means that ink is a _____.

Answer 1

Ink is a variable cost because its cost varies with the quantity of T-shirts produced. As production decreases, the unit cost for ink increases, which can lead to higher product prices to maintain profit margins.

Step-by-step explanation:

If the cost of your ink supplies increases as the quantity of T-shirts produced decreases, ink is considered to be a variable cost. In business and economics, variable costs are costs that vary with the level of quantity supplied. This means that the less you produce, the higher the cost per unit becomes. Conversely, if you produce more, the cost per unit can decrease.

Furthermore, according to economic principles, when the cost of production increases, the price for the product will also need to increase to maintain the desired profit margin. This is due to the fact that businesses generally set prices based on the costs of production plus a profit margin.

An improvement in technology that reduces the cost of production can lead to an increase in supply or a rightward (or downward) shift in the supply curve. This lower cost of production enables firms to supply more at each price level, or to supply the same quantity at a lower price.

Answer 2

From the statement “The cost of your ink supplies increases as the quantity of T-shirts produced decreases”, it means that the ink is inversely proportional to the quantity of T-shirt produced. If we are to present this problem into equation, it will have T = k(1/i) where T is the quantity of T-shirts, K is the constant and 1/I is the ink.