​Table 17-36 the Information in the Table Shows the Total Demand for Demand

question 255

Multiple Choice

​Table 17-36
The information in the table shows the total demand for water service in Takoma. Assume that there are two companies operating in Takoma. Each company that provides these services incurs an annual fixed cost of $400 and that the marginal cost of providing the service to each customer is exactly $2.00. Figures listed are for an annual service contract.
​
-​Refer to Table 17-36. If there were only one water service provide in this market, and this single firm maximizes profits, the company will

• A)​sell 500 service contracts and charge a price of $35 for each contract.
• B)​sell 600 service contracts and charge a price of $30 for each contract.
• C)​sell 700 service contracts and charge a price of $25 for each contract.
• D)​sell 800 service contracts and charge a price of $20 for each contract.

---

Definitions:

Lead Time

The total time taken from the initiation to the completion of a production process, including the time required for ordering materials and manufacturing.

Review Interval

The predefined period between successive evaluations or assessments of a system, process, or performance.

Supply Reduction

A decrease in the amount of goods provided in the market, which can result from various factors, including production cuts or supply chain disruptions.

Safety Inventory

Safety inventory refers to a quantity of stock maintained to mitigate the risk of stockouts due to demand and supply variability.