Simplex Games, a Not-For-Profit Entity Organized to Provide Athletic Competition

question 24

Multiple Choice

Simplex Games, a not-for-profit entity organized to provide athletic competition opportunities for high school students, utilizes a number of volunteers in carrying out its mission. At the 2017 Games 50 volunteers provided a total of 1,000 hours of service performing tasks such as picking up litter and delivering water to the athletes. A local CPA firm donates its services to prepare the annual tax return and other federal and state required paperwork which must be filed to maintain its status as a tax-exempt organization. During 2017 the CPA firm provided 50 hours of service. If purchased, the CPA services would have cost $60 per hour and the game workers would have cost $6 per hour. How much contributed service revenue should Simplex Games recognize in 2017?

• A) $9,000.
• B) $6,000.
• C) $3,000.
• D) $0.

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Definitions:

Purely Competitive Industries

Markets characterized by many buyers and sellers, homogeneous products, and free entry and exit, leading to price-taking behavior.

Cut-Throat Competition

Intense competition where competitors use aggressive tactics to undercut each other’s prices and gain market share.

Consumer Demand

The desire by consumers to purchase goods and services, quantified by the amount of a product people are willing to buy at certain price levels.

Equilibrium Price

The price at which the quantity of a good or service demanded equals the quantity supplied, leading to a stable market condition.