Boone Products Had the Following Unit Costs: a One-Time

question 60

Multiple Choice

Boone Products had the following unit costs: A one-time customer has offered to buy 2,000 units at a special price of $48 per unit.Because of capacity constraints, 1,000 units will need to be produced during overtime.Overtime premium is $8 per unit.How much additional profit (loss) will be generated by accepting the special order?

• A) $30,000 loss
• B) $4,000 loss
• C) $24,000 loss
• D) $4,000 profit

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Definitions:

Long Run

a period in which all factors of production and costs are variable, allowing firms to adjust all inputs.

Monopolistically Competitive

Describes a market structure where many firms sell products that are similar but not identical, allowing for product differentiation and some degree of market power.

Normal Profit

The minimum level of profit needed for a company to remain competitive in the market, equating to its opportunity costs.

Economic Profit

The surplus remaining after total costs (including both explicit and implicit costs) are subtracted from total revenues, reflecting the opportunity costs of all resources.