A Firm Makes Two Products, Y and Z

question 15

Multiple Choice

A firm makes two products, Y and Z. Each unit of Y costs $10 and sells for $40. Each unit of Z costs $5 and sells for $25. If the firm's goal were to maximize profit, the appropriate objective function would be

• A) maximize $40Y = $25Z
• B) maximize $40Y + $25Z
• C) maximize $30Y + $20Z
• D) maximize 0.25Y + 0.20Z
• E) none of the above

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Definitions:

Loan

A financial agreement where a lender provides funds to a borrower, who agrees to repay the amount with additional interest over a defined period.

Economic Value

Assessing the value that a good or service delivers to someone involved in the economy.

Payment Streams

A series of payments made over a period of time, often referring to regular debits or credits to an account.

Earn

To receive money as payment for work that has been done or to make a profit.