A Company Has Three Products (X, Y, and Z) That

question 38

Multiple Choice

A company has three products (X, Y, and Z) that it sells, packs, and ships to its customers. Because the products have different sizes they also have different packing and shipping costs so we will use a new measure-a packing/shipping unit. Because Product Y is the smallest of the three products, we will assign it a value of 1 packing/shipping unit. Product X is twice as big as Product Y and Product Z is four times as big as Product Y. On a monthly basis, this company sells an average of 1,500 units of Product X, 800 units of Product Y, and 60 units of Product Z. If the company spends on average of $3,720 each month on total packing/shipping costs, what amount should it allocate to Product X per month (to the nearest dollar amount) ?

• A) $736
• B) $1,380
• C) $1,836
• D) $2,500
• E) $2,760

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Definitions:

Production Possibility Frontier

A curve depicting the maximum attainable combinations of two products that may be produced with available resources and current technology.

Inefficiency

A situation where resources are not used in the best possible way, often leading to waste and a lower output than could be achieved.

Trade

The exchange of goods, services, or both between two or more parties.

Factors of Production

The assets employed to produce goods and services, encompassing land, labor, capital, and entrepreneurship.