Gabe Industries Sells Two Products, Basic Models and Deluxe Models

question 266

Multiple Choice

Gabe Industries sells two products, Basic models and Deluxe models. Basic models sell for $41 per unit with variable costs of $15 per unit. Deluxe models sell for $45 per unit with variable costs of $45 per unit. Total fixed costs for the company are $1310.4. Gabe Industries typically sells four Basic models for every Deluxe model. What is the breakeven point in total units?

• A)63 units
• B)50 units
• C)32 units
• D)29 units

Describe the effect of output changes on fixed, variable, and total costs.

Recognize the significance of Adam Smith’s pin factory example in illustrating economies of scale.

Understand the difference between a hypothesis and a prediction.

Recognize the various sources of research ideas.

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Definitions:

Interaction Effect

Occurs when the effect of one independent variable on the dependent variable changes based on the level of another independent variable.

Crime Area

A region or locality with high incidence of criminal activity.

Main Effect

The direct impact of an independent variable on a dependent variable, disregarding the effects of or interactions with other variables.

Interaction Effect

In experimental design, the effect on the dependent variable that occurs from the combined influence of two or more independent variables.