A manager invests $20,000 in equipment that would help the company reduce it's per unit costs from $15 to $12 . He expects the equipment to be in use for the next seven years. After two years, he realizes that if he outsourced the production, the unit cost would be $7 instead. At this point what should the senior manager do?
a. Charge the manager for the next five years of depreciation
b. Write off the equipment as sunk cost and allow for outsourcing since it is cheaper
c. Not allow for outsourcing since the equipment is good for another five years
d. None of the above
b
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When a park is funded by visitors, but not by taxpayers in general,
a. there will be too few parks because most people simply will not pay to use a park. b. visitors will be better served because poor service would lead to reductions in revenues. c. maintenance in the park will suffer because budgets will decline. d. we cannot predict what will happen because park funding by visitors has not been tried before.
Suppose the price of a bag of tortilla chips decreases from $3.00 to $2.50 and, as a result, the quantity of tortilla chips demanded increases from 200 bags to 300 bags. Using the midpoint method, the price elasticity of demand for tortilla chips in the given price range is
a. 0.33. b. 0.45. c. 2.20. d. 3.00.