Two Alternatives, Code-Named X and Y, Are Under Consideration at Afalava

question 145

Multiple Choice

Two alternatives, code-named X and Y, are under consideration at Afalava Corporation. Costs associated with the alternatives are listed below.
-What is the differential cost of Alternative Y over Alternative X,including all of the relevant costs?

• A)$103,000
• B)$39,000
• C)$142,000
• D)$122,500

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Definitions:

More Elastic

Describes a demand that is highly responsive to changes in price, where consumers are willing to buy significantly more or less of a product when its price changes.

Long-Run Equilibrium

A state in which all inputs in production can be adjusted, and there is no tendency for change in economic variables.

Average Total Cost

The per-unit cost of production, calculated by dividing the total cost of production by the number of units produced, including both fixed and variable costs.

Demand Schedule

A table that shows the relationship between the price of a good and the quantity demanded at each price level.