Suppose the Campus Bookstore Purchases 50,000 Boxes of Writing Tablets

question 19

Multiple Choice

Suppose the Campus Bookstore purchases 50,000 boxes of writing tablets every year. Ordering costs are $100 per order and carrying costs are
$0) 40 per box. Moreover, management has determined that the EOQ is 5,000 boxes. The vendor now offers a quantity discount of $0.20 per box if the company buys tablets in order sizes of 10,000 boxes. Determine the before-tax benefit or loss of accepting the quantity discount. (Assume the carrying cost remains at $0.40 per box whether or not the discount is taken.)

• A) $1,000 loss
• B) $1,000 benefit
• C) $ 500 loss
• D) $ 500 benefit
• E) $ 0 (The change would not affect profits.)

Recognize the impact of investment in capital goods on economic growth in DVCs.

Appreciate the role of human resources and entrepreneurial efforts in economic development.

Analyze the challenges of population expansion and capital flight in DVCs.

Understand the advantages of infrastructure development in the early stages of economic development.

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Definitions:

Central Planning

A system where decisions about production, investment, and distribution are made by the government or a centralized authority.

Comparative Advantage

The capability of a person or group to execute a specific economic action more effectively than another action.

Exchange

The act of giving one thing and receiving another, especially of the same type or value, commonly used in the context of goods, services, or financial instruments.

Individuals

Refers to single human beings, distinct from a group, class, or family.