Consider a Small Firm That Is Producing Winter Jackets

question 111

Multiple Choice

Consider a small firm that is producing winter jackets.It can lease an additional sewing machine for one month for $750.With this additional machine,the firm can produce an additional 6 jackets during that time period that it sells for $125 each.Hiring the marginal machine adds ________ to the firm's profit and so it should ________ the machine.

• A)-$750; not lease
• B)-$750; lease
• C)$0; be indifferent as to whether to lease
• D)$750; not lease
• E)$750; lease

Understand the functions and strategic use of competitive advertisements, including comparative advertising.

Comprehend the significance and usage of reminder advertisements.

Grasp the impact of advertising on consumer perception and behavior.

Understand the implications and regulations regarding comparative advertisements.

---

Definitions:

Direct Materials

Raw materials that can be directly attributed to the production of goods, easily identifiable and quantifiable.

Variable Costs

Costs that change in proportion to the level of production or sales activities of a business.

Cost Per Unit

Cost per unit is the total expense incurred to create or purchase a unit of product, calculated by dividing total costs by the number of units produced or purchased.

Fixed Factory Overhead

Costs related to the production that do not vary with the level of output, such as rent, salaries of permanent staff, and depreciation.