A Firm Is Pondering Over the Introduction of a New

question 26

Multiple Choice

A firm is pondering over the introduction of a new good with a profit contribution of $70 per unit.Each unit of the good uses 2 units of input A and 3 units of input B.The shadow price of A is $10,and the shadow price of input B is $15.Which of the following statements is true?

• A)The firm should produce the new good.
• B)The opportunity cost of producing the new good is $75.
• C)The firm should not produce the new good.
• D)Producing the new good will earn a profit of $10.
• E)Producing the new good will earn a loss of $5.

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Definitions:

Instantaneous Change

A rapid or sudden shift in conditions, values, or states, often used in mathematics and physics to describe changes occurring at a specific point in time.

Manual System

A system or process performed by human effort rather than by using digital tools or automation.

Scheduling Optimization

The process of determining the most efficient and effective schedule for resources and activities, often involving complex computational techniques to find the optimal solution.

Retail Stores

Physical locations where consumers can purchase goods or services directly from a business.