If It Costs View Your World, a High- End Window

question 57

Multiple Choice

If it costs View Your World, a high- end window manufacturer, $26 per window to install a higher quality glass in its windows and consumers will pay an additional $15 per window for the improvement, which of the following is true?

• A)View Your World should install the higher quality glass because the marginal revenue from the quality enhancement exceeds the marginal cost.
• B)View Your World should install the higher quality glass because the marginal revenue from the quality enhancement is less than the marginal cost.
• C)View Your World should not install the higher quality glass because the marginal revenue from the quality enhancement is less than the marginal cost.
• D)View Your World should not install the higher quality glass because the marginal revenue from the quality enhancement exceeds the marginal cost.

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Definitions:

Inelastic Demand

A market situation in which the demand for a product does not significantly change with its price increase or decrease.

Total Revenues

The entire amount of income generated by a company from its business activities, before any expenses are subtracted.

Fixed Costs

Costs that do not change with the level of output or sales, such as rent, salaries, and loan payments.

Variable Costs

Costs that change in proportion to the level of output or activity.