Lewis Auto Company Manufactures a Part for Use in Its

question 155

Essay

Lewis Auto Company manufactures a part for use in its production of automobiles.When 10,000 items are produced,the costs per unit are:

Monty Company has offered to sell Lewis Auto Company 10,000 units of the part for $120 per unit.The plant facilities could be used to manufacture another part at a savings of $180,000 if Lewis Auto accepts the supplier's offer.In addition,$20 per unit of fixed manufacturing overhead on the original part would be eliminated.
Required:
a.What is the relevant per unit cost for the original part?
b.Which alternative is best for Lewis Auto Company? By how much?

Recognize the difference between slope and elasticity.

Identify the different types of elasticity along a demand curve.

Analyze the effect of elasticity on consumer behavior and market outcomes.

Understand the concept of binocular rivalry and its effects on perception.

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Definitions:

Operant Behavior

Conduct that is governed or impacted by its outcomes, such as incentives or sanctions.

Influences

Factors or agents that have an effect on the development, behavior, or decisions of individuals or systems.

Environment

Every nongenetic influence, from prenatal nutrition to the people and things around us.

Learned Associations

Connections made in the mind between two experiences or ideas, which can influence thoughts, feelings, and behaviors.