A Firm Is Pondering the Introduction of a New Good

question 26

Multiple Choice

A firm is pondering the introduction of a new good with a profit contribution of $70 per unit. Each unit of the good uses 2 units of input A and 3 units of input B. The shadow price of A is $10, and the shadow price of input B is $15. Which of the following statements is true?

• A) The firm should produce the new good.
• B) The opportunity cost of producing the new good is $75.
• C) The firm should not produce the new good.
• D) Producing the new good will earn a profit of $10.
• E) Producing the new good will earn a loss of $5.

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Definitions:

Esteem Needs

Esteem needs encompass an individual's desire for respect, self-esteem, self-confidence, and the recognition and appreciation from others.

Achievement Motivation

Describes a person's drive to strive for success and accomplish challenging goals.

Competitive Situations

Scenarios or environments where individuals or groups are in competition with each other to achieve a certain goal, often leading to heightened levels of performance.

Standard Of Excellence

A level of quality or achievement that is considered superior and serves as a benchmark for others to strive toward.