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The Great Foods Company Processes Milk into Skim Milk and Butter

question 107

Multiple Choice

The Great Foods Company processes milk into skim milk and butter. This year 70,000 litres of milk will be processed, costing $40,000. If processed to the split-off point, this will yield 40,000 litres of skim milk and 10,000 kilograms of butter. Skim milk is sold to distributors for $1 per litre and butter is sold for $0.75 per kilogram. Great Foods has the option of processing the two products further. Skim milk can be processed into canned, sweetened and condensed skim milk and sold for $0.80 per can. One litre of skim milk makes 2 cans of condensed milk. To process 40,000 litres of skim milk it will cost $18,000. Butter can be processed into cake frosting and sold in containers for $2 each. One kilogram of butter goes into each container of frosting. The cost of processing 10,000 kilograms of butter into frosting costs $15,000.
What is the per-unit joint cost allocated to condensed milk and frosting if the sales value at split-off method is used?

Identify the role of minimum wages as a form of price floor and its impact on employment and market dynamics.

Evaluate the ethical and political motivations behind the implementation of price controls by the government.

Discuss the potential for black markets as a result of stringent price controls and quotas.

Interpret the potential for surplus or shortage given specific price control policies in graphical or tabular market models.

Definitions:

Fastest Growing

Describes sectors, industries, or economies that are increasing in size or value at the most rapid pace.

Family Farms

Agricultural operations owned and operated by families, typically involving multiple generations working together.

World War II

A global conflict that lasted from 1939 to 1945, involving most of the world's nations and culminating in significant changes to the geopolitical landscape.

Hourly Wage

A rate an employer agrees to pay a worker for each hour worked.