Suppose Two Types of Consumers Buy Suits

question 137

Multiple Choice

Suppose two types of consumers buy suits.Consumers of type A will pay $100 for a coat and $50 for pants.Consumers of type B will pay $75 for a coat and $75 for pants.The firm selling suits faces no competition and has a marginal cost of zero.If the firm charges $75 for pants and $75 for a coat,the firm will sell a coat to:

• A) type A consumers.
• B) type B consumers.
• C) type A consumers and type B consumers.
• D) None of the answers are correct.

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Definitions:

Machine-Hours

refers to the total time that production equipment is operated during a specific period, used as a basis for allocating manufacturing overhead.

Assembly Department

A segment within a manufacturing facility where parts are put together to form a finished product.

Predetermined Overhead Rate

is an estimated rate used to allocate manufacturing overhead costs to individual products or job orders based on a specific activity base.

Finishing Department

The final stage in the manufacturing process where products are completed, packaged, and prepared for delivery.