Suppose a Jar of DeLux Popcorn That Is Ultimately Sold

question 57

Multiple Choice

Suppose a jar of DeLux popcorn that is ultimately sold to a customer at Friendly Groceries is produced by the following production process:  
$$\begin{array} { | l | c | c | } \hline { \text { Name of Campany } } & \text { Revenues } & \text { Cast af Pur chased Inguts } \\\hline \text { Fulton Farrily Farm } & \$ 0.50 & \mathbf { 0 } \\\hline \text { DeLux Popconl Co. } & \$ 2.50 & \$ 0.50 \\\hline \text { Friendly Groceries } & \$ 4.00 & \$ 2.50\end{array}$$  
What is the value added of Friendly Groceries?

• A)$1.50
• B)$2.50
• C)$3.50
• D)$4.00

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Definitions:

Economies of Scale

The cost advantage that arises with increased output of a product, as fixed costs are spread over more units.

Horizontal

A term describing alignment or arrangement on a single plane or level, often used to denote businesses operating at the same stage of the production process.

Anti-Trust Legislation

Laws aimed at promoting competition by regulating and preventing anti-competitive business practices.

Justice Department

A part of the U.S. federal government responsible for the enforcement of the law and administration of justice.