A Company Sells Two Products with Information as Follows Products Are Made by Machine

question 14

Multiple Choice

A company sells two products with information as follows:
$\begin{array}{|l|l|l|} \hline & \text { A } & \text { B } \\\hline \text { Price per unit } & \$ 12 & \$ 22 \\\hline \text { Variable cost per unit } & \$ 10 & \$ 10\\\hline \end{array}$

Products are made by machine.4 units of Product A can be made with one machine hour and 2 units of Product B can be made with one machine hour.The company has a maximum of 5000 machine hours available per month.Assume there are no constraints on sales of either product and the company could choose any product mix they wish.What is the maximum amount of contribution margin that the company could earn in a month?

• A) $120,000
• B) $100,000
• C) $10,000
• D) $220,000

Interpret the production possibility frontier (PPF) and its implications for opportunity cost and economic trade-offs.

Analyze the impact of changes in resource availability, technology, and preferences on the PPF.

Distinguish between different types of shifts and movements along the PPF.

Apply the concept of opportunity cost to decision-making in resource allocation.

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Definitions:

Commitment

The state or quality of being dedicated to a cause, activity, or relationship, often demonstrated through perseverance and loyalty.

Costs

Expenses or expenditures required for something; can refer to financial, emotional, or other forms of costs.

Rewards

Benefits, incentives, or compensations received as a result of one's actions or behaviors.

Labeling Theory

The view that reactions of, and characterizations by, others are an essential element in deviance.