Maxi Production Is a Price-Taker

question 96

Multiple Choice

Maxi Production is a price-taker. They produce large spools of electrical wire in a highly competitive market, and so they practice target pricing. The current market price is $800 per unit. The company has $2,000,000 in assets and shareholders expect a return of 5% on assets. The company provides the following information: Currently the cost structure is such that the company cannot achieve its profit objective and must cut costs. If variable costs CANNOT be reduced, how much reduction in fixed costs will be needed to achieve the profit target?

• A)Reduce fixed costs by $1,300,000
• B)Reduce fixed costs by $1,050,000
• C)Reduce fixed costs by $990,000
• D)Reduce fixed costs by $1,200,000

Understand the exclusive rights provided by patents and the exclusions to what can be copyrighted.

Learn the purpose and limitations of various equitable remedies in contract law.

Understand the concept of expected utility and how it applies to decision-making under uncertainty.

Identify and analyze risk preferences (risk-averse, risk-neutral, and risk-loving) and their implications on decision-making.

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Definitions:

Forest Fires

Uncontrolled fires that occur in wooded areas, which can have devastating effects on wildlife, vegetation, and human structures, often exacerbated by dry conditions and high winds.

Acres

A unit of area commonly used in the United States, equivalent to 43,560 square feet or about 4047 square meters.

Standard Deviation

A measure of the amount of variation or dispersion of a set of values, showing how much variation exists from the average.

Snowfall

Precipitation in the form of flakes of crystalline water ice, falling from clouds when air temperatures are below the freezing point of water.