alfred has plotted revenue and cost graphs for his pastry business. hes testing a number of cost assumptions…

alfred has plotted revenue and cost graphs for his pastry business. hes testing a number of cost assumptions against his businesss revenue. which two statements correctly interpret the graphs? cost falls and revenue rises up to approximately $6 per pastry. after approximately $6, both cost and revenue fall. costs continue to fall beyond approximately $6 because of an increase in revenue. revenue continues to rise regardless of the change in price. revenue falls and cost rises up to approximately $17.

alfred has plotted revenue and cost graphs for his pastry business. hes testing a number of cost assumptions against his businesss revenue. which two statements correctly interpret the graphs? cost falls and revenue rises up to approximately $6 per pastry. after approximately $6, both cost and revenue fall. costs continue to fall beyond approximately $6 because of an increase in revenue. revenue continues to rise regardless of the change in price. revenue falls and cost rises up to approximately $17.

Answer

Explanation:

Step1: Analyze revenue graph

Observing the revenue - price graph, we can see that as the price changes, the revenue has a non - linear relationship. There is a point where revenue starts to fall as price continues to increase.

Step2: Analyze cost graph

Looking at the cost - price graph, we note that cost is a linear function of price. As price increases, cost also increases.

Step3: Evaluate statements

  • Analyze each statement one by one. For the statement "Cost falls and revenue rises up to approximately $6 per pastry", we check the graphs. We see that initially as the price per pastry increases, revenue rises and cost also rises. There is no indication that cost falls while revenue rises up to $6 per pastry.
  • For the statement "After approximately $6, both cost and revenue fall", this is incorrect as the cost graph shows a continuous increase and the revenue graph shows a decline after a certain point but not both falling simultaneously after $6.
  • For the statement "Costs continue to fall beyond approximately $6 because of an increase in revenue", this is wrong as cost is increasing with price as shown in the cost graph.
  • For the statement "Revenue continues to rise regardless of the change in price", this is incorrect as the revenue graph shows a peak and then a decline.
  • The statement "Revenue falls and cost rises up to approximately $17" seems consistent with the behavior of the two graphs. As the price approaches $17, revenue is on a downward trend and cost is on an upward trend.

Answer:

The statement "Revenue falls and cost rises up to approximately $17" correctly interprets the graphs.