The Specialty T-Shirt Company Is Now Operating at Capacity

question 155

Multiple Choice

The Specialty T-shirt Company is now operating at capacity. It is considering taking in a special order to make 5,000 "Spring Break" T-shirts, which it can sell at $30 each. If it makes these shirts, it will have to make 5,000 fewer regular T-shirts, which sell at $10 each. The reduction in revenue due to making fewer regular t-shirts is an example of

• A) Opportunity cost
• B) Sunk cost
• C) Outlay cost
• D) Irrelevant cost

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Definitions:

Normal Good

An item whose demand grows when the income of consumers goes up, and diminishes when their income goes down.

Used Cars

Pre-owned vehicles that have had one or more retail owners, sold through various outlets including dealerships and private sales.

Input Production

The process of using resources (inputs) to create goods or services.

Substitutes Consumption

Refers to the consumption of goods that can replace each other in use, affecting the demand for these goods.