Question

Tiffany owns a bookstore and wants to determine the fixed and variable costs associated with selling do-it-yourself books. She made a graph with the number of books sold on the x-axis and the costs associated with selling the books on the y-axis. Tiffany fitted a line to her plot and made special note of where the line crossed the y-axis. What will this tell her?

A) The value of her variable costs.
B) The value of her fixed costs.
C) The rate at which variable costs increase.
D) How quickly books are sold.

Answer 1

The y-intercept of the line graph Tiffany made shows the value of her fixed costs for the bookstore, which are the costs incurred regardless of the number of books sold.

Step-by-step explanation:

When Tiffany made a graph with the number of books sold on the x-axis and the costs associated with selling the books on the y-axis, the point where the line fitted to her plot crosses the y-axis will tell her about her fixed costs.

This is because the vertical intercept, where the quantity of output (in this case, the number of books sold) is zero, represents the costs that are not dependent on the level of production or sales, which are known as fixed costs.

Therefore, this intercept corresponds to the amount Tiffany will incur regardless of how many books she sells.

The slope of the line would represent the rate at which variable costs increase as more books are sold. Variable costs vary with the level of output; for example, the cost of additional printing for more books.

However, since the question specifically mentions the y-intercept, the correct answer is that it shows the value of her fixed costs.

correct option B) The value of her fixed costs.