Suppose That a New Alloy Is Invented Which Uses Copper

question 25

Multiple Choice

suppose that a new alloy is invented which uses copper and zinc in fixed proportions where 1 unit of output requires 3 units of copper and 3 units of zinc for each unit of alloy produced.If no other inputs are needed, the price of copper is $4, and the price of zinc is $5, what is the average cost per unit when 4,000 units of the alloy are produced?

• A)$1.33
• B)$14.17
• C)$1,333.33
• D)$27
• E)$14,166.67

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Definitions:

Unamortized Premium

The portion of the bond premium that has not yet been amortized or gradually written off against earnings over the bond's life.

Par-Value Approach

An accounting method that assigns a nominal value to the shares of a corporation, which may bear no correlation to the market value of those shares.

Common Shares

Equity securities representing ownership in a corporation, providing voting rights, and entitling holders to a share of the company’s success through dividends and/or capital appreciation.

Agency Approach

A mechanism used in financial management where one party (the agent) is allowed to act on behalf of another (the principal) in financial transactions or decisions.