Chicago Corporation Has a Joint Process That Produces Three Products

question 61

Multiple Choice

Chicago Corporation has a joint process that produces three products: X,Y and Z.Each product may be sold at split-off or processed further and then sold.Joint-processing costs for a year amount to $100,000.Other data follows:
$\begin{array}{llll}&\text { Sales Value }&\text {Separable Processing }&\text {Sales Value }\\ \text {Product }&\text {at Split-Off}&\text {Costs after Split-Off }&\text { at Completion}\\X & \$ 128,000 & \$ 16,000 & \$ 152,000 \\Y & 50,000 & 26,000 & 76,000 \\Z & 25,600 & 20,000 & 40,000\end{array}$
Processing Product X beyond the split-off point will cause profits to ________.

• A) be unchanged
• B) increase by $8,000
• C) increase by $24,000
• D) decrease by $24,000

Grasp the concept of the marginal rate of transformation and its relevance to efficient economies.

Understand the relationship between production processes and market demands to maximize profit.

Analyze scenarios of resource allocation and its impact on social welfare.

Apply economic concepts to analyze resource allocation decisions.

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Definitions:

Chlorine

A chemical element with symbol Cl and atomic number 17, known for its extensive use in disinfection and as a bleaching agent.

Copper

A red-orange metal that is a ductile, malleable element with very high thermal and electrical conductivity.

Cobalt

Cobalt is a chemical element with symbol Co and atomic number 27, known for its use in alloys and magnets.

Sulfur

A yellow, nonmetallic element that exhibits a characteristic smell and plays a vital role in the chemical industry.