Use the Following Information for the Next 3 Questions

question 82

Multiple Choice

Use the following information for the next 3 questions.
Horton and Associates produces two products named BigBlast and LittleBlast. Last month 4,000 units of BigBlast and 1,000 units of the LittleBlast were produced and sold. Following are average prices and costs for last month: The production lines for both products are highly automated, so large changes in production cause very little change in total direct labor costs. Workers who are classified as direct labor monitor the production line and are permanent employees who regularly work 40 hours per week. All costs other than "corporate fixed costs" listed under each product line could be avoided if the product line were dropped.
-Using only the information provided above, Horton could make several types of decisions. Possible decisions include I. Keep or drop
II. Product emphasis
III. Special order
IV. Constrained resources

• A) I and II only
• B) I and III only
• C) I, II, and IV only
• D) III and IV only

Differentiate between elastic, inelastic, and unit-elastic demand.

Analyze the impact of price changes on quantity demanded and total revenue.

Recognize the significance of the availability of substitutes on the elasticity of demand.

Interpret demand curves and the elasticity at various points.

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Definitions:

Listing Agreement

A contract between a property owner and a real estate agent, authorizing the agent to act on the owner’s behalf in the sale of the property.

Privity of Contract

A principle in contract law stating that only parties involved in the contract have the right to sue to enforce their rights or claim damages.

Commission

A fee paid for services, typically a percentage of the transaction value, to an agent or salesperson for facilitating or completing a sale.

Agreement of Purchase and Sale

A legally binding contract between a buyer and seller detailing the terms and conditions of the sale of property.