Diamond Company has three product lines, A, B, and C. The following financial information is available: ItemProduct Line A Product Line B Product Line C Sales$66,000 $135,000 $30,000 Variable costs$39,600 $72,000 $18,750 Contribution margin$26,400 $63,000 $11,250 Fixed costs: Avoidable$6,100 $18,000 $8,400 Unavoidable$4,800 $13,500 $3,800 Pre-tax operating income$15,500 $31,500 $(950) If Product Line C is discontinued and the manufacturing space formerly devoted to this line is rented for $6,000 per year, pre-tax operating income for the company will likely:

6. why the aggregate supply curve slopes upward in the short run in the short run, the quantity of output that firms supply can deviate from the natural level of output if the actual price level in the economy deviates from the expected price level. several theories explain how this might happen. for example, the misperceptions theory asserts that changes in the price level can temporarily mislead firms about what is happening to their output prices. consider a soybean farmer who expects a price level of 100 in the coming year. if the actual price level turns out to be 90, soybean prices will , and if the farmer mistakenly assumes that the price of soybeans declined relative to other prices of goods and services, she will respond by the quantity of soybeans supplied. if other producers in this economy mistake changes in the price level for changes in their relative prices, the unexpected decrease in the price level causes the quantity of output supplied to the natural level of output in the short run.