Scenario 2.6 You Currently Purchase a Part Used in Your Production Process

question 49

Multiple Choice

Scenario 2.6
You currently purchase a part used in your production process from an outside supplier, and have decided to begin making this part in-house. You have two equipment options for moving production in-house: special-purpose equipment and general-purpose equipment. Cost information for these two options is as follows:

-Use Scenario 2.6 to answer this question. What are total costs under the Special-Purpose Equipment option for an annual quantity of 40,000 units?

• A) $400,000
• B) $500,000
• C) $800,000
• D) $850,000

Identify the role of expectations and number of suppliers on market supply.

Understand the impact of government policies on supply.

Comprehend the relationship between the prices of related goods and demand or supply.

Understand the difference between a change in quantity supplied and a change in supply.

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Definitions:

Car Loan

A financial loan that consumers use specifically to buy a new or used car, typically secured against the car itself.

Interest Rate

The interest rate is the percentage of the loan amount that lenders charge borrowers as interest, usually represented as an annual percentage of the remaining loan balance.

Afford

The financial ability of an individual or organization to bear the cost of something without experiencing financial strain.

Borrowing

The act of receiving funds from another party with the agreement to repay the principal amount along with any agreed-upon interest or fees.