Game Company Manufactures Two Products, a and B $\begin{array} { l }&A&B\\ \text { Selling price per unit }&\$54.00&\$66.00 \\ \text { Variable cost per unit}&39.00&54.00\\\end{array}$

question 118

Multiple Choice

Game Company manufactures two products, A and B. The following information was gathered: $\begin{array} { l }&A&B\\ \text { Selling price per unit }&\$54.00&\$66.00 \\ \text { Variable cost per unit}&39.00&54.00\\\end{array}$

$\text { Total fixed costs } \quad \$ 30,000$ Assume Game Company could produce and sell any mix of products A and B at full capacity. If product A takes twice as long to manufacture as product B and only 120,000 hours of plant capacity are available, it is best for Game Company to produce:

• A) only A
• B) an equal number of A and B
• C) either A or B, there is no difference
• D) only B

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Definitions:

Indifference Curves

Graphical representations in microeconomics showing different bundles of goods between which a consumer is indifferent.

Consumer's Preferences

The subjective tastes and desires that guide consumer behavior in choosing among various goods and services.

Prices

The price projected, required, or paid in return for a particular item.

Marginal Rate

The rate at which one quantity changes with respect to a change in another quantity, often used in the context of tax or interest.