There Is Only One Gas Station Within Hundreds of Miles

question 54

Multiple Choice

There is only one gas station within hundreds of miles. The owner finds that when she charges $3 a gallon, she sells 199 gallons a day, and when she charges $2.99 a gallon, she sells 200 gallons a day. The marginal revenue of the 200th gallon of gas is

• A) $.01.
• B) $1.
• C) $2.99.
• D) $3.
• E) $600.

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Definitions:

Outsourcing

The business practice of hiring a party outside a company to perform services or create goods that traditionally were performed in-house by the company's own employees.

Network Organization

Liaisons between specialist organizations that rely strongly on market mechanisms for coordination.

Coordination

The management of dependencies between activities.

Span

Often used in the context of "span of control," referring to the number of subordinates that a manager or leader can effectively oversee.