Table 11-2 Consider a Small Town with Only Three Families, the Johnson

question 258

Multiple Choice

Table 11-2
Consider a small town with only three families, the Johnson family, the Marshall family, and the Walker family. The town does not currently have any streetlights so it is very dark at night. The three families are considering putting in streetlights on Main Street and are trying to determine how many lights to install. The table below shows each family's willingness to pay for each streetlight.

-Refer to Table 11-2.Suppose the cost to install each streetlight is $180 and the families have agreed to split the cost of installing the streetlights equally.To maximize their own surplus,how many streetlights would the Johnson's like the town to install?

• A) 0 streetlights
• B) 1 streetlight
• C) 2 streetlights
• D) 3 streetlights

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Definitions:

Carrying Costs

The total costs associated with holding inventory, including warehousing, insurance, and loss from obsolescence.

Shortage Costs

Expenses incurred when demand exceeds supply, often leading to lost sales or higher production costs.

Weighted Average Delay

The average delay time for all items being processed, taking into account the proportion that each item contributes to the total amount.

Collection Delay

The time lag between when a payment is made by a customer and when the funds become available to the recipient company.