A Competitive Firm Has a Single Factory with the Cost

question 37

Multiple Choice

A competitive firm has a single factory with the cost function c(y) = 4y2 + 89 and produces 28 units in order to maximize profits.Although the price of output does not change, the firm decides to build a second factory with the cost function c(y) = 8y2 + 39.To maximize its profits, how many units should it produce in the second factory?

• A)14
• B)21
• C)9
• D)13
• E)None of the above.

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Definitions:

Current Asset

Assets that are expected to be converted into cash, sold, or consumed within one year or within the normal operating cycle of the business, whichever is longer.

Asset Turnover Ratio

A financial metric that measures the efficiency of a company in generating sales revenue from its investments in assets.

Perpetual Inventory System

A system for inventory accounting that immediately records inventory transactions, whether it's a sale or purchase, through computerized point-of-sale systems and software for managing enterprise assets.

Periodic Inventory System

An accounting method where inventory and the cost of goods sold are determined at the end of an accounting period.