A snowboard company currently hires 10 skilled employees who are paid a weekly wage of $1,000.The cost of capital is $3,000 and it is fixed, which means that it does not vary with output.The company is currently producing 24 snowboards .The company's cost will be $13,500 if it produces an additional snowboard. A customer is willing to pay $550 for the 241st snowboard . i) Should the company produce and sell it? (Yes or No). Explain ii) What core principles should be considered in the snowboard company's decision making? Scarcity ,choice and opportunity cost Cost benefit analysis Incentive principle Diminishing returns
A snowboard company currently hires 10 skilled employees who are paid a weekly wage of $1,000.The cost of capital is $3,000 and it is fixed, which means that it does not vary with output.The company is currently producing 24 snowboards .The company's cost will be $13,500 if it produces an additional snowboard. A customer is willing to pay $550 for the 241st snowboard . i) Should the company produce and sell it? (Yes or No). Explain ii) What core principles should be considered in the snowboard company's decision making? Scarcity ,choice and opportunity cost Cost benefit analysis Incentive principle Diminishing returns
Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
14th Edition
ISBN:9781305506381
Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Chapter8: Cost Analysis
Section: Chapter Questions
Problem 9E
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A snowboard company currently hires 10 skilled employees who are paid a weekly wage of $1,000.The cost of capital is $3,000 and it is fixed, which means that it does not vary with output.The company is currently producing 24 snowboards .The company's cost will be $13,500 if it produces an additional snowboard. A customer is willing to pay $550 for the 241st snowboard .
- i) Should the company produce and sell it? (Yes or No). Explain
- ii) What core principles should be considered in the snowboard company's decision making?
- Scarcity ,choice and
opportunity cost - Cost benefit analysis
- Incentive principle
- Diminishing returns
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