An Obscure Inventor in Strasburg, North Dakota, Has a Monopoly

question 40

Multiple Choice

An obscure inventor in Strasburg, North Dakota, has a monopoly on a new beverage called Bubbles, which produces an unexplained craving for Lawrence Welk music.Bubbles is produced by the following process: Q = min{R/2, W}, where R is pulverized Lawrence Welk records and W is gallons of North Dakota well water.P_R = P_W = $1.Demand for Bubbles is Q = 576P^-2A^0.5.If the advertising budget for Bubbles is $81, the profit-maximizing quantity of Bubbles is

• A)0.
• B)36.
• C)432.
• D)144.
• E)140.

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Definitions:

Unfavorable

A term often used in finance and accounting to describe a variance or outcome that leads to a worse financial position than expected.

Volume Variance

The difference between the budgeted volume of production or sales and the actual volume, indicating whether a business performed better or worse than expected.

Predetermined Overhead Rate

A rate calculated before a period begins, used to allocate overhead costs to products or cost objects based on a relevant activity base.

Labor-Hour

The unit of measure representing the amount of work performed by an employee in one hour.