You Are the Manager of Telecall Inc

question 39

Essay

You are the manager of Telecall Inc.,a small telemarketing company.Your company pays $10,000 per month for office space.A real estate agent has noticed that you are only using 75 percent of your available space and tells you that Telecall could add $800 per month to its bottom line by renting out the space it does not use.Telecall has been asked to do a new telemarketing campaign for a large credit card company,but this would require it to use the remaining office space.What is the opportunity cost of using the extra office space to handle the credit card company's promotion?

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Definitions:

Price

The amount of money required to purchase a good or service, or the value that consumers are willing to pay for it.

Apples

Edible fruits with a sweet taste and crisp texture, coming in many varieties and colors like red, green, and yellow.

Utility Function

A mathematical representation of a consumer's preference ordering over a set of goods or outcomes, showing the level of satisfaction or utility derived from each.

Substitution Effect

The change in consumption patterns due to a change in the relative prices of goods, leading consumers to substitute cheaper goods for more expensive ones.