A Company Is Evaluating Which of Two Alternatives Should Be

question 26

Multiple Choice

A company is evaluating which of two alternatives should be used to produce a product that will sell for $35 per unit.The following cost information describes the two alternatives If total demand (volume) is 150,000 units,then the company should

• A)select Process A with a profit of $1,300,000 to maximize profit
• B)select Process B with a profit of $750,000 to maximize profit
• C)select Process A with a profit of $1,000,000 to maximize profit
• D)select Process B with a profit of $1,050,000 to maximize profit

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Definitions:

Principal-Agent Problem

An economic conflict where an individual (the agent) has the responsibility to act for the benefit of another party (the principal), but might fail to do so because of differing interests.

Representative Democracy

A form of government where citizens elect officials to represent their interests and make decisions on their behalf in the legislative process.

Private Business

A business entity owned and operated by private individuals, not controlled by the government, and aimed at earning profit.

Public Agencies

Government departments or organizations that operate within the public sector, providing services to the nation or a community.