A Department Accepts a New Order from a Customer

question 6

Multiple Choice

A department accepts a new order from a customer. It has already incurred £100 for design costs. It has also incurred costs of £200 for visits by sales staff. If the order is accepted a quality inspector will be transferred from another department. The inspector earns £20,000 per year. If the order is accepted there will be additional training costs of £700.
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In this decision the differential costs for visits by staff are:

• A)£0.
• B)£100.
• C)£200.
• D)£300.

Identify how prices serve as economic signals in markets.

Understand the concept of total surplus and its components: consumer surplus and producer surplus.

Recognize the role of property rights in market efficiency.

Understand how market equilibrium affects efficiency and total surplus.

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Definitions:

Degrees of Freedom

Represents the number of independent pieces of information available to estimate another piece of information or parameter in a dataset.

Test Statistic

A value calculated from sample data during a hypothesis test, used to decide whether to reject the null hypothesis.

T Value

A value derived from a T-test, used to determine if there is a significant difference between two groups.

Independent-Samples T Test

A method of statistical analysis that compares the average values of two separate groups to see if their differences are statistically meaningful.