New Age Makeup Produces Face Cream

question 20

Multiple Choice

New Age Makeup produces face cream. Each bottle of face cream costs $10 to produce and can be sold for $13. The bottles can be sold as is, or processed further into sunscreen at a cost of $14 each. New Age Makeup could sell the sunscreen bottles for $23 each.

• A) Face cream must be processed further because its profit is $9 each.
• B) Face cream must not be processed further because costs increase more than revenue.
• C) Face cream must not be processed further because it decreases profit by $1 each.
• D) Face cream must be processed further because it increases profit by $3 each.

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Definitions:

Laissez Faire

An ideology that supports a capitalist market economy free from regulatory oversight by the government.

Basic Questions

Basic Questions in economics typically refer to the fundamental queries about what to produce, how to produce, and for whom to produce, guiding allocation of resources.

Market Failure

A scenario where the distribution of goods and services through a free market fails to achieve efficiency, typically resulting in a decrease in overall social welfare.

Public Goods

Goods that are non-excludable and non-rivalrous, meaning they can be used by everyone without diminishing availability to others, such as public parks and street lighting.