Orange Corporation Has a Joint Process That Produces Three Products

question 138

Multiple Choice

Orange Corporation has a joint process that produces three products: P,G and A.Each product may be sold at split-off or processed further and then sold.Joint-processing costs for a year amount to $25,000.The production level for each product is 10,000 units.Other data follows: If Product P is processed beyond the split-off point,profit will ________.

• A)increase $90,000
• B)increase $120,000
• C)increase $210,000
• D)stay the same

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Definitions:

Consumer Surplus

The difference in the total amount that customers are ready and financially able to invest in a good or service and the amount they truly pay.

Producer Surpluses

The difference between what producers are willing to sell their goods for and the actual price they receive.

Creative Destruction

A concept in economics implying the dismantling of long-standing practices in order to make way for innovation and advancement.

Government Regulation

Government Regulation involves the imposition of rules by government authorities to control or manage market activities, with the aim of protecting public interest.