Gin and Oki Chen Are About to Purchase a New

question 6

Multiple Choice

Gin and Oki Chen are about to purchase a new home in San Francisco.The first home shown to the couple is a lovely ranch-style house.As Gin looks at the home she comments to the real estate broker,"This will never do.I am sorry but the front entrance faces northwest.No one would ever visit us.May we please see another house from your list." Her husband concurs.Which of the following would explain why Gin Chen's statement was so strong and why she would rather look at another home?

• A)She is afraid of earthquakes in the San Francisco area.
• B)She dislikes the color of the house but is afraid to say so because it would be rude.
• C)She never has liked houses that face shaded areas.
• D)She is from southern China and,therefore,prefers an entrance that faces southwest.
• E)She respects traditional feng shui beliefs.

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Definitions:

Markup

The amount added to the cost of a product to determine its selling price, usually expressed as a percentage of the cost.

Differential Analysis

The process of comparing the costs and benefits of alternative business decisions.

Processing Cost

The expenses incurred in the course of transforming raw materials into finished products.

Differential Income

Definition: The difference in income between two alternative business decisions, focusing on the incremental or additional revenue generated.