The Copy Department in the College of Business at State

question 148

Multiple Choice

The Copy Department in the College of Business at State University provides photocopying service for both the Marketing and Economics Department.The following budget has been prepared for the year. $$\begin{array} { | l | l | } \hline \text { Available capacity } & 6,000,000 \text { pages } \\\hline \text { Budgeted us age: } & \\\hline \text { Marketing } & 3,600,000 \text { pages } \\\hline \text { Economics } & 1,800,000 \text { pages } \\\hline \text { Cost equation } & \$ 120,000 + \$ 0.025 \text { per page } \\\hline\end{array}$$ If the Copy Department uses a dual-rate for allocating its costs,how much cost will be allocated to the Economics Department,assuming the Economics Department actually made 2,100,000 copies during the year?

• A) $85,000.
• B) $92,500.
• C) $132,500.
• D) $112,500.

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Definitions:

Increasing Returns To Scale

A situation in production where an increase in the scale of inputs leads to a more than proportional increase in output.

Weak Axiom

In consumer theory, it refers to the consistency of consumer choice behavior under the assumption of non-increasing preferences.

Profit-maximizing Behavior

An economic principle where businesses seek to achieve the highest possible profit from their operations.

Short-run Production Function

The short-run production function describes the relationship between input and output levels when at least one input (like capital) is fixed and cannot be changed immediately.