Marlow Company Makes Bulk Quantities of Cleaning Fluids

question 107

True/False

Marlow Company makes bulk quantities of cleaning fluids.They currently sell 1,400 containers a month at a sales price of $25 per unit.If they add a new scent,they could charge $30 per unit for the improved product.It would cost them a total of $1,000 per month to make that alteration.If they decide to process further,it will improve their operating income.

---

Definitions:

Spillover Costs

Costs incurred by third parties as a result of economic activities that are not reflected in market transactions.

Concentrated Benefits

Advantages that are significantly focused on a small group rather than being distributed widely across many individuals.

Diffuse Costs

Costs that are spread out over many consumers or taxpayers, making them hard to identify and attribute to any single action.

Median-Voter Model

A theory suggesting that the outcome of majority voting processes will reflect the preferences of the median voter.