Drummer Produces Two Products, a and B

question 77

Multiple Choice

Drummer produces two products, A and B. The following information is available for these two products:

-If only 5,000 units of each product, A and B can be sold, it would be best to

• A) discontinue A as it results in a net loss of $2.00 per unit, and continue producing B.
• B) produce only 2,500 units of A and 5,000 units of B to maximize profits.
• C) produce 5,000 units of both A and B.
• D) discontinue the production of both A and B.

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Definitions:

Sales Taxes

Taxes imposed by governmental entities on sales of goods and services, typically collected at the point of sale from the consumer.

Regressive

Referring to a tax system where the tax rate decreases as the taxable amount increases, placing a higher relative burden on lower-income earners.

Progressive

Pertaining to political, social, or economic beliefs favoring or promoting changes, reforms, or innovations.

Personal Taxes

Taxes levied on individuals based on their income, wealth, or property ownership, affecting disposable income and purchasing power.