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 240 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. Should the company produce and sell it? YES/NOExplain 2(a) What core principles should be considered in the snowboard company’s decision making?Scarcity, Choice and Opportunity CostCost-Benefit analysisIncentive PrincipleDiminishing ReturnsSelect one:All principles considered(i) only(i)and (ii) only(i), (ii) and (iii) only(ii) and (iii) only(i) and (iv) only(ii) and (iv) only(iii)and (iv) only(ii), (iii) and (iv) only

No. of workers hired = 10 Weekly wage per worker = $1000 Weekly wages for 10 workers = $ 10000 Fixed…

Answered: A snowboard company currently hires 10…

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 5E

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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 240 snowboards. The company’s cost will be $13,500 if it produces an additional snowboard. A customer is willing to pay $550 for the 241^st snowboard.

Should the company produce and sell it? YES/NO
Explain

2(a) 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

Select one:

All principles considered
(i) only
(i)and (ii) only
(i), (ii) and (iii) only
(ii) and (iii) only
(i) and (iv) only
(ii) and (iv) only
(iii)and (iv) only
(ii), (iii) and (iv) only

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