The Fabrication Division of American Car Company Has Offered to Purchase

question 53

Essay

The Fabrication Division of American Car Company has offered to purchase 90,000 batteries from the Electrical Division for $104 per unit. At a normal volume of 250,000 batteries per year, production costs per battery are as follows:

The Electrical Division has been selling 250,000 batteries per year to outside buyers at $136 each; capacity is 350,000 batteries per year. The Fabrication Division has been buying batteries from outside sources for $130 each.
Required:
a.Should the Electrical Division manager accept the offer? Explain.
b.From the company's perspective, will the internal sales be of any benefit? Explain.

Distinguish between efficient and equitable distributions.

Analyze the impact of incentives on individual behavior in economic models.

Evaluate the role of government intervention in achieving economic efficiency and equity.

Understand the significance of resource allocation in determining standards of living.

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Definitions:

Nonadaptive Coping Skill

Inadequate or maladaptive methods used by individuals to handle stress, which do not effectively resolve the stressor and can worsen well-being.

Adaptive Coping Skill

Behaviors and strategies that help individuals manage the demands of stress in a healthy and productive way.

Cultural Barrier

Obstacles present in cross-cultural communication and understanding, which arise from differences in language, behavior, norms, and customs.

Religious Barrier

Factors within belief systems that can impede understanding, communication, or actions between individuals of different religions.