Scenario: a Firm Wants to Set Up a Factory

question 94

Multiple Choice

Scenario: A firm wants to set up a factory. It has four different options. The rent of the factory in each of the four different locations and the time taken to transport the product from each location to the market is shown in the table below. The opportunity cost of time is $10 per hour.

-Refer to the scenario above.If the firm chooses factory Far over Close,what is its marginal opportunity cost of transporting products to the market?

• A) $100
• B) −$200
• C) $50
• D) $150

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Definitions:

Sales Tax

A government-imposed tax on sales of goods and services, typically collected at the point of sale from consumers.

Charge Customer

This involves billing a customer for goods or services rendered, resulting in an accounts receivable entry in the company's books.

Accounts Receivable

Amounts owed to a company by customers for goods or services that have been delivered or used, but not yet paid for.

Net Sales

Total revenue from sales less returns, allowances, and discounts.