JetSky Airways Has Three Divisions,the Western Division,the Eastern Division,and the Northern

question 77

Multiple Choice

JetSky Airways has three divisions,the Western Division,the Eastern Division,and the Northern Division.The manager of the Western Division had wanted to purchase replacement airplanes for the division.However,he decided against it because,although revenues would increase and the new planes would be less expensive to operate,the initial cost of the planes was quite large.The Western Division is most probably accounted for as a(n)

• A)cost center.
• B)investment center.
• C)profit center.
• D)revenue center.
• E)none of these.

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Definitions:

Shift Demand

A change in the quantity demanded at every price point, caused by factors other than the price of the product itself.

Derived Demand

Demand for a good or service that arises from the demand for another good or service; for example, the demand for steel is derived from the demand for cars.

Capital

Financial assets or the financial value of assets, such as funds held in deposit accounts and/or funds obtained from special financing sources.

Marginal Productivity Theory

An economic theory suggesting that the payment to each factor of production equals the added productivity that one additional unit of the factor brings to the product.