Priestly Automobiles Company Fabricates Automobiles

question 45

Multiple Choice

Priestly Automobiles Company fabricates automobiles.Each vehicle includes one wiring harness,which is currently made in-house.Details of the harness fabrication are as follows:

An Indonesian factory has offered to supply Priestly with ready-made units for a price of $13 per wiring harness.Assume that Priestly's fixed costs are unavoidable,but that Priestly could use the vacated production facilities to earn an additional $9,500 of profit per month.If Priestly decides to outsource,monthly operating income will ________.

• A)increase by $5,500
• B)decrease by $14,000
• C)increase by $9,500
• D)decrease by $26,300

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Definitions:

Decision-Making Heuristic

Cognitive shortcuts or rules of thumb that simplify decision-making processes, often used under conditions of uncertainty.

Consumer Decision-Making

The process by which consumers identify their needs, gather information, evaluate alternatives, and make purchases.

Country of Origin

The country where a product has been manufactured or produced, often influencing consumer perceptions and purchasing decisions.

Purchaser Choice

The decision made by consumers regarding which products or services to buy among available options.