Yellco Inc ? the Company Has Received an Offer from an Exporter

question 62

Multiple Choice

Yellco Inc., a toy manufacturer, provided the following information: $$\begin{array} { l r } \text { Domestic unit sales price } & \$ 50 \\\text { Unit manufacturing costs: } & \\\text { Variable } & 10 \\\text { Fixed } & 8\end{array}$$ ? The company has received an offer from an exporter for 9,000 units of toys at $60 per unit.The additional business is not expected to affect the normal production or domestic sales prices of Yellco Inc.What is the amount of gain or loss from acceptance of the offer?

• A) $450,000 gain
• B) $162,000 loss
• C) $315,000 loss
• D) $162,000 gain

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Definitions:

Utility Increase

A rise in the level of satisfaction or benefit that a consumer derives from the consumption of goods or services.

Contract Curve

In economics, it represents the set of optimal distributions of goods or resources between parties that maximizes their utility in an exchange.

Relative Price

The price of a good or service in comparison to the price of other goods and services, reflecting its opportunity cost.

Marginal Utility

The additional satisfaction or utility a consumer gains from consuming one more unit of a good or service.