A Steel Maker Needs 5,000,000 Tons of Coal Next Year

question 44

Multiple Choice

A steel maker needs 5,000,000 tons of coal next year.The current market price for coal is $70.00 per ton.At this price,the firm expects its EBIT to be $500 million.What will the firm's EBIT if the firm enters into a supply contract for coal for a fixed price of $72.00 per ton?

• A)$500 million
• B)$510 million
• C)$490 million
• D)$350 million
• E)$410 million

---

Definitions:

Cost-benefit Analysis

A systematic approach to estimating the strengths and weaknesses of alternatives used to determine options that provide the best approach to achieve benefits while preserving savings.

Economic Project

A planned undertaking, typically with specific goals and financial frameworks, aimed at contributing to economic development or addressing economic issues.

Public Good

A good that is non-excludable and non-rivalrous, meaning it can be used by everyone and one person's use does not reduce availability to others.

Nongovernmental Organization

A nonprofit, voluntary citizens' group which is organized on a local, national or international level to perform a variety of service and humanitarian functions.