Vest Industries Manufactures 40,000 Components Per Year

question 80

Multiple Choice

Vest Industries manufactures 40,000 components per year.The manufacturing cost of the components was determined as follows: An outside supplier has offered to sell the component for $12.75.Fixed costs will remain the same if the component is purchased from an outside supplier.
What is the effect on income if Vest Industries purchases the component from the outside supplier?

• A)$270,000 decrease
• B)$270,000 increase
• C)$30,000 decrease
• D)$30,000 increase

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Definitions:

Antitrust Charges

Legal actions against businesses accused of practices that restrain competition, violate antitrust laws, and harm consumers and the market.

Sherman Act

A foundational United States antitrust law passed in 1890 that aims to prevent monopolistic practices and promote competition.

Antitrust Laws

Regulations designed to promote fair competition for the benefit of consumers, by limiting monopolistic practices and ensuring market competitiveness.

Economic Efficiency

A condition in which every resource is optimally allocated to serve each individual or entity in the best way while minimizing waste and inefficiency.