Greg's Breads Can Produce and Sell Only One of the Following

question 16

Multiple Choice

Greg's Breads can produce and sell only one of the following two products: The company has oven capacity of 1,500 hours. How much will contribution margin be if it produces only the most profitable product?

• A) $15,000
• B) $20,000
• C) $22,500
• D) $30,000

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Definitions:

Identical Good

A product that is uniform in quality and features across different producers, making it indistinguishable between sources.

Marginal Cost

The charges incurred for the production of an additional unit of a good or service.

Deadweight Loss

A loss of economic efficiency that can occur when the equilibrium for a good or a service is not achieved due to market inefficiencies.

Consumer Surplus

The difference in planned versus actual spending by consumers on a good or service.