Marsha Marsh Is Going to Sell Christmas Tree Lights for $20

question 180

Multiple Choice

Marsha Marsh is going to sell Christmas tree lights for $20 a box.The lights cost Marsha $5 a unit and any unsold lights can be returned for a full refund.She is planning to rent a booth at the upcoming Baggy Green's Christmas Convention,which offers three options:
1.paying a fixed fee of $1500,or
2.paying a $500 fee plus 10% of revenues made at the convention,or
3.paying 25% of revenues made at the convention.
Which of the following statements is FALSE?

• A)Contribution margin will vary depending upon the option chosen.
• B)One of the options will allow Marsha to break even,even if she doesn't sell any lights.
• C)Operating profit will be the greatest for Option 3.
• D)Her decision will determine the risk she faces.

Analyze the impact of fixed and variable costs on firm's production decisions.

Distinguish between short-run and long-run operational decisions for firms.

Evaluate the consequences of changes in market price on firm's profit maximization strategy.

Interpret cost curves and their relevance to production and shutdown decisions.

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Definitions:

Computer Assisted Telephone Interviewing (CATI)

A method of conducting surveys where an interviewer uses a computer system to guide the process and record responses.

Text-Based

Relates to communication or information that is delivered primarily through written language.

Email-Based

Pertaining to methods, communication, or processes that are conducted through the use of email.

Synergistic Group Effect

The phenomenon where the combined effort of a group produces a greater effect than the sum of their individual efforts.