The Setup Cost to Make a Carpet Is $20 Per

question 37

Multiple Choice

The setup cost to make a carpet is $20 per setup.The holding cost is $2.00 per yard per year,and the annual demand is 12,000 yards.The manufacturing facility operates 300 days,and 120 yards of the carpet are produced per day.Given this information,what is total annual set up cost?

• A)$600
• B)$500
• C)$400
• D)$300

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Definitions:

Long-Run Equilibrium

A state in which all firms in a market are earning normal profits, and there is no incentive for firms to enter or exit the market.

Marginal Cost

Marginal cost is the additional cost incurred by producing one additional unit of a good or service.

Celebrity Spokesperson

A famous individual who is paid to use their fame to help promote a product or service.

Monopolistic Competitors

Companies that have many competitors but try to differentiate their products from others to gain a competitive edge.