Use the Information Below to Answer the Following Question(s)

question 146

Multiple Choice

Use the information below to answer the following question(s) .
Healthy Greetings Corporation produces and sells fruit baskets for special events. The unit selling price is $60, unit variable costs are $45, and total fixed costs are $2,670.
-How many fruit baskets must Healthy Greetings Corporation sell to break even?

• A) 10,680
• B) 45
• C) 178
• D) 25

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Definitions:

Asymmetric Information

An instance where in a transaction, one entity has higher or more detailed information than another.

Principal-Agent Problem

A dilemma in economics arising when one party (the agent) is able to make decisions and/or take actions on behalf of, or that impact, another party (the principal).

Moral-Hazard Problem

A situation where one party engages in risky behavior knowing that it is protected against the consequences, often because another party bears the cost of those actions.

Moral-Hazard Problem

The moral-hazard problem arises in situations where one party's willingness to take risks is increased because the negative consequences of those risks will be borne by another party.