State University's College of Business Is Divided into Three Departments

question 192

Multiple Choice

State University's College of Business is divided into three departments, accounting, marketing, and management. Relevant information for each department is provided below: $$\begin{array} { l c c c } \text { Cost Driver } & \text { Accounting } & \text { Marketing } & \text { Management } \\\text { Number of gtudenta } & 700 & 400 & 200 \\\text { Number of clageg } & 32 & 18 & 14 \\\text { per semester } & & & \\\text { Number of faculty } & \text { 10 } & 12 & 5\end{array}$$ The Dean of the College of Business is trying to assign funds from the operating budget to the three departments. Assuming that the chair of each department is trying to attain the highest funding possible for his/her department, which of the following most accurately describes the allocation base that each chair will favor?

• A) The chair of the Management department will want to use the number of classes while the chair of the Marketing department will prefer the number of faculty.
• B) The chair of the Accounting department and the chair of the Management department will want to use the number of faculty.
• C) The chair of the Marketing department will want to use number of students, while the chair of the Accounting department will want to use number of classes per semester.
• D) The chair of the Accounting department will want to use number of students while the chair of the Management department will want to use number of faculty.

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Definitions:

Consumer Surplus

The difference between the total amount consumers are willing to pay for a good or service and the total amount they actually pay.

Producer Surplus

The difference between what producers are willing to accept for a good versus what they actually receive, evidencing economic benefit.

Costume Jewelry

Jewelry made from inexpensive materials and imitation gems, designed to provide an attractive appearance at a lower cost than jewelry made from precious metals and stones.

Consumer Surplus

The difference between what consumers are willing to pay for a good or service versus what they actually pay.