Greg Plans to Open Up Three Hottie Pata'tee Franchises in the Greater

question 299

Multiple Choice

Greg plans to open up three Hottie Pata'tee franchises in the greater Denver area.He just informed you that he plans to negotiate with the franchisor to eliminate the Big Potato Head that graces the roof of these restaurants.Greg is likely to learn that:

• A)The parent company will give him a start-up cost break for the same amount that it would have to pay for three of these signs.
• B)He is making a smart decision because it is not the sign that will bring customers to his potato bar.It is the wide-selection of toppings and six different ways he will cook potatoes.
• C)It is non-negotiable due to company rules.
• D)His failure rate will not increase or decrease because franchises traditionally have low failure rates.

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Definitions:

Total Utility

The overall satisfaction or enjoyment a person gets from consuming a certain quantity of goods or services.

Marginal Utility

The boost in contentment or usefulness someone achieves from consuming an additional item of a good or service.

Consumer Surplus

The variance between the price consumers intend to pay for a good or service and the price they actually incur.

Marginal Utility

The extra pleasure or benefit gained by a consumer from using one more unit of a product or service.