Regular Production Costs $13 Per Unit and Selling a Unit

question 31

Multiple Choice

Regular production costs $13 per unit and selling a unit represents a cash inflow of $28 per unit. Assume that all units reflected on the forecast will be sold. What is the cumulative net cash flow through March? $$\begin{array} { | l | c | c | } \hline{ \text { Month } } & \text { Forecast } & \text { Regular Production } \\\hline \text { Tanuary } & 250 & 250 \\\hline \text { February } & 200 & 200 \\\hline \text { March } & 300 & 300 \\\hline \text { April } & 400 & 400 \\\hline\end{array}$$

• A)$11,250
• B)$4,500
• C)$8,400
• D)$3,900

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Definitions:

Perfect Price Discrimination

A market scenario where a seller charges each buyer their maximum willingness to pay, resulting in the seller capturing all available consumer surplus.

Consumer Surplus

The difference between what consumers are willing to pay for a good or service and what they actually pay, representing the benefit to consumers.

Perfectly Price Discriminate

A pricing strategy where a seller charges the highest price that each individual customer is willing to pay, thus capturing the maximum possible revenue.

Tying Contracts

A business practice where a seller requires the buyer to purchase a secondary product or service together with a primary product or service.