Use the Following Information to Answer the Questions Below

question 73

Multiple Choice

Use the following information to answer the questions below.
You currently make a part for old equipment at a cost of $20 / unit.The annual fixed cost for this equipment is $50,000.You have found an outside supplier who will make the part for $15 / unit if you will pay their annual fixed costs of $200,000 / year (see table) .

-Refers to the instruction above.What are total costs to buy an annual quantity of 40,000 units?

• A)$400,000
• B)$500,000
• C)$800,000
• D)$850,000

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Definitions:

Elasticity of Supply

The measure of how much the quantity supplied of a good changes in response to a change in price.

Income Elasticity

A measure of how much the quantity demanded of a good responds to a change in consumers' income, holding everything else constant.

Housing Demanded

The quantity of residential properties that buyers are willing and able to purchase at a given price level.

Demand Elasticity

A quantification of the effect of price variation on the demand level for a specific good.