Spruce Pine Mfg

question 102

Multiple Choice

Spruce Pine Mfg. Co. has total fixed costs of $300,000 a year. The owner estimates that average variable costs for its product will be about $30 next year. The selling price to wholesalers will be $50. The break-even point is:

• A) 6,000 units.
• B) 10,000 units.
• C) 12,000 units.
• D) 15,000 units.
• E) None of these alternatives is correct.

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Definitions:

Higher Wage

A payment for labor services that is above the average or minimum rate typically offered in the market or sector.

Derived Demand

Demand for a factor of production or input that arises from the demand for the final product it contributes to producing.

Marginal Productivity Theory

A principle in economics that suggests the payment to a factor of production (like labor or capital) corresponds to its marginal productivity, which is the additional output generated by one more unit of that factor.

Income Distribution

The way in which total income is shared among individuals or groups within a society.