Alpha Co Can Produce a Unit of Beta for the Following

question 50

Multiple Choice

Alpha Co. can produce a unit of Beta for the following costs: An outside supplier offers to provide Alpha with all the Beta units it needs at $60 per unit. If Alpha buys from the supplier, Alpha will still incur 40% of its overhead. Alpha should:

• A) Buy Beta since the relevant cost to make it is $72.
• B) Make Beta since the relevant cost to make it is $56.
• C) Buy Beta since the relevant cost to make it is $48.
• D) Make Beta since the relevant cost to make it is $48.
• E) Buy Beta since the relevant cost to make it is $56.

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Definitions:

Investment Goods

Long-term assets purchased for the purpose of generating income, growth, and/or value appreciation.

Interest Rate

The percentage charged on borrowed money, or earned through savings and investments, reflecting the cost of borrowing or the benefit of saving.

Short Run

A period in economic analysis where at least one factor of production is fixed, leading to limited adjustments in production or operation.

Long-Run Phillips Curve

A graph showing that, in the long term, there is no trade-off between inflation and unemployment, suggesting the relationship is vertical.