i believe this is the answer n(2)-7<span />
The selling price is 2.5 times the cost. If the cost goes up by 0.25, the selling price needs to go up by 2.5*0.25 = 0.63 in order to maintain the gross margin.
In order to do this we have to get all the numbers into percent form.
60% = 60%
0.4 = 40%
1/5 = 0.2 = 20%
So, the order from smallest to biggest is 1/5, 0.4, and 60%.
In general when a firm produces nothing it still has to pay for the fixed costs while the variable costs are zero
