Gnome Company Is Trying to Decide Whether to Continue to Manufacture

question 160

Multiple Choice

Gnome Company is trying to decide whether to continue to manufacture a particular component or to buy the component from an outside supplier. Which of the following is RELEVANT to this decision?

• A) The potential uses of the facilities that are currently used to manufacture the component
• B) The insurance on the manufacturing facility which will continue regardless of the decision
• C) Allocated corporate fixed costs which would have to be allocated to other products if the component is no longer manufactured
• D) The cost of the equipment that is currently being used to manufacture the component

Understand the nature and scope of sociology and the sociological perspective.

Comprehend the concept of a sociological compass and apply it to one’s own social location.

Identify and articulate the distinguishing features of the sociological perspective.

Grasp the concept of the sociological imagination and discuss its three pillars with examples.

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Definitions:

Maximum Economic Profits

The highest level of profit achievable by a firm operating in a perfectly competitive market, where marginal cost equals marginal revenue.

Short-Run Equilibrium

A state in which supply and demand are balanced at a particular price level within a short timeframe, before any significant external changes can occur.

Total Cost

The entire cost of production including both fixed and variable costs.

Marginal Cost

The upsurge in total financial outlay occasioned by the production of one supplementary unit of a product or service.