Each Unit of a Product Requires Four Components

question 15

Multiple Choice

Each unit of a product requires four components. The average number of components is 4.25 due to component failure. Purchasing higher quality components can reduce the average number of components to four per unit. The cost per component is $350. Calculate the reduction in failure costs per unit due to purchasing higher quality components.

• A) $43.75
• B) $350
• C) $175
• D) $87.50
• E) $372

---

Definitions:

Equilibrium

A condition where the supply and demand in the market are equal, leading to stable pricing.

Tit-For-Tat Strategy

A cooperative and retaliatory strategy in game theory where a player replicates an opponent's previous action.

Repeated Game

A strategic situation where the same game is played several times, allowing for strategy development based on previous outcomes.

Cooperation

The process of groups or individuals working together towards a common goal or interest.