Suppose That You Have Two Processes a and B for Producing

question 39

Multiple Choice

Suppose that you have two processes A and B for producing a widget.Process A has a fixed cost of $10,000 and per unit variable cost of $80.00.Process B has a fixed cost of $30,000 and the per unit variable cost is $40.00.The widget sells for $100 regardless of production process used.During the next three years (your planning horizon for the widgets) you expect the economy to be pretty good with sales of widgets to be at least 700 units per year.You will

• A)be indifferent between choosing Process A and B , because they both have the same break-even point.
• B)choose Process A since it has a low fixed cost.
• C)choose Process B, since it has low variable cost.
• D)choose either Process A or B, since both will result in same profit for the next three years.
• E)choose Process B, since it will have higher net profit than process A in the next three years.

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Definitions:

Family System

A concept in psychology and sociology that views the family as a complex set of interactions and relationships, influencing and being influenced by each member.

Expected Behavior

The actions or reactions anticipated from an individual in a particular context or situation.

Societal Norms

The shared rules, standards, and expectations that guide behavior and interactions within a society.

Prohibits

To formally forbid something by law, rule, or other authority.