The Gear Division Makes a Part with the Following Characteristics

question 147

Multiple Choice

The Gear Division makes a part with the following characteristics:
$$\begin{array} { l l } \text { Production capacity } & 25,000 \text {units } \\\text { Selling price to outside customers } & \$ 18 \\\text { Variable cost per unit } & \$ 11 \\\text { Fixed cost, total } & \$ 100,000\end{array}$$
The Motor Division of the same company would like to purchase 10,000 units each period from the Gear Division. The Motor Division now purchases the part from an outside supplier at a price of $17 each.
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Suppose that the Gear Division is operating at capacity and can sell all of its output to outside customers. If the Gear Division sells the parts to Motor Division at $17 per unit, the company as a whole will be:

• A) better off by $10,000 each period.
• B) worse off by $20,000 each period.
• C) worse off by $10,000 each period.
• D) There will be no change in the status of the company as a whole.

Recognize the importance and challenges of achieving a representative sample.

Comprehend the relationship between variables in research settings.

Understand the significance of response rates and their impact on research validity.

Recognize biases and problems in survey research and strategies to counteract them.

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Definitions:

Income

Money received, typically on a regular basis, for work or through investments.

Marginal Rate

A term that may refer to the rate at which one variable changes as another variable changes marginally, often used in the context of taxes, substitution, or transformation.

Substitution

The act of replacing one good or service with another in response to shifts in relative prices or changes in consumer preferences.

Bundle

A group of products or services that are sold together as a single package, often at a discounted price.