Scenario 1-3 Suppose a T-Shirt Manufacturer Currently Sells 5,000 T-Shirts Per Week

question 394

Multiple Choice

Scenario 1-3
Suppose a t-shirt manufacturer currently sells 5,000 t-shirts per week and makes a profit of $10,000 per week. A manager at the plant observes, "Although the last 400 t-shirts we produced and sold increased our revenue by $4,000 and our costs by $4,800, we are still making an overall profit of $10,000 per week so I think we're on the right track. We are producing the optimal number of t-shirts."

-Refer to Scenario 1-3. Using marginal analysis terminology, what is another economic term for the incremental revenue received from the sale of the last 400 t-shirts?

• A) gross earnings
• B) marginal revenue
• C) sales revenue
• D) gross profit

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Definitions:

Allocation of Salaries

Allocation of salaries involves distributing payroll expenses to different departments, projects, or activities based on their usage or involvement in the business operations.

Partnership Management

The governance and operational strategies employed by partners in a business venture to ensure efficient collaboration and achievement of mutual goals.

Average Capital

The mean amount of capital invested or employed in a business or project over a certain period, used to assess financial efficiency.

Years with Partnership

The duration of time an individual has been involved or engaged in a business partnership.