Micro Enterprises Has the Capacity to Produce 10,000 Widgets

question 10

Multiple Choice

Micro Enterprises has the capacity to produce 10,000 widgets a month,and currently makes and sells 9,000 widgets a month.Widgets normally sell for $6 each,and cost an average of $5 to make,including fixed costs.The monthly fixed costs are $18,000.Coyote Corp.has offered to buy 1,000 widgets at $4 each. On this information alone,should Micro accept the offer?

• A)No,because it will lose $1 per unit
• B)No,because it will lose $2 per unit
• C)No,because it will exceed capacity
• D)Yes,because it makes $1 per unit in the short run
• E)Unable to determine

Evaluate strategies to improve critical and creative thinking skills.

Understand the mental processes involved in sudden insights or solutions to problems.

Identify the elements of mastery in a variety of skills beyond rote memorization.

Understand the relationship between the prices of capital and labor and their substitution in production.

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Definitions:

Eroded Away

The process by which rocks and soil are worn down by the action of water, wind, or ice, often resulting in altered landscapes.

Youngest Unit

The most recent stratum or rock layer in a sequence of geological formations.

Dominant Type

signifies the most prevalent or influential species, form, or kind within a particular environment or context.

Cenozoic

The current geological era, beginning 66 million years ago and characterized by the dominance of mammals, birds, and flowering plants.