A Company Is Evaluating Which of Two Alternatives Should Be

question 56

Multiple Choice

A company is evaluating which of two alternatives should be used to produce a product that will sell for $35.00 per unit.The following cost information describes the two alternatives

For what level of volume output) would the firm prefer Process A to Process B?

• A)for all volume levels greater than 75,000
• B)for all volume levels greater than 97,500
• C)for all volume levels greater than 117,500
• D)for all volume levels greater than 125,000

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Definitions:

Perfect Substitutes

Items that can replace each other without affecting the consumer's satisfaction negatively.

Perfect Complements

Goods that are consumed together in fixed proportions because the consumption of one enhances the value or utility of the other.

Pareto Optimal

A resource allocation condition wherein it is infeasible to make improvements for any individual or preference without imposing disadvantages on at least one other.

Utility Function

A mathematical representation that ranks various bundles of goods according to the levels of satisfaction they provide to the consumer.