Figure 17-2 Walton Company Manufactures a Product with the Following

question 58

Multiple Choice

Figure 17-2 Walton Company manufactures a product with the following costs per unit at the expected production level of 84,000 units:
The company has the capacity to produce 90,000 units.The product regularly sells for $120.
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Refer to Figure 17-2.If a wholesaler offered to buy 4,500 units for $100 each, the effect of the special order on income would be a

• A) $153,000 increase.
• B) $45,000 increase.
• C) $450,000 increase.
• D) $90,000 decrease.

Understand the concept of barriers to entry and their effect on market competition.

Recognize the dynamics of a monopoly, including how monopolies establish and maintain their market power.

Differentiate between the pricing and output strategies of monopolies versus perfect competition.

Analyze marginal cost and marginal revenue to determine optimal output levels.

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Definitions:

Disability Insurance

A type of insurance policy providing income in the event a worker is unable to perform their job due to disability.

Contract

A legally binding agreement between two or more parties that is enforceable by law.

Mutual Consideration

The reciprocal exchange of value or promises within a contract, where each party agrees to give up something in return for receiving something else of value.

Subrogation

The process by which one party takes over the rights of another party, typically in the context of insurance claims.