You Are the Manager of a Firm That Produces Output

question 61

Multiple Choice

You are the manager of a firm that produces output in two plants.The demand for your firm's product is P = 120 - 6Q, where Q = Q₁ + Q₂.The marginal cost associated with producing in the two plants are MC₁ = 2Q₁ and MC₂ = 4Q₂.What price should be charged to maximize profits?

• A)60.
• B)66.
• C)70.
• D)76.

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Definitions:

Exchange Gain

A profit resulting from foreign currency transactions when the value of the currency received is higher than the value of the currency exchanged at the transaction rate.

Spot Rate

The current market price for immediate settlement of a currency exchange, commodity, or security.

Singapore Dollars (SGD)

The official currency of Singapore, represented by the symbol S$.

Cash-flow Hedge

A hedge of the exposure to variability in cash flows that is attributable to a particular risk associated with a recognized asset or liability, or a forecasted transaction.