Azure Inc Has Sales of $4,500 Million, and It Uses Only

question 16

Multiple Choice

Azure Inc. has sales of $4,500 million, and it uses only 80 percent of its plant capacity. It can increase its sales to _____ without having to increase its plant and equipment.

• A) $2,530 million
• B) $4,125 million
• C) $5,625 million
• D) $6,150 million
• E) $7,035 million

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Definitions:

External Benefits

refer to positive effects of a transaction or activity on third parties who are not directly involved in the transaction.

Economic Efficiency

A situation in which resources are optimally allocated to serve each individual or entity in the best way while minimizing waste and inefficiency.

Market

A system or an environment where buyers and sellers interact to trade goods, services, or financial instruments.

Free-rider Problem

A situation where individuals consume goods or services without paying for them, which typically occurs with non-excludable and non-rival public goods.