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Holiday Decorations Unique has been approached by the community college to make special decorations for the faculty and staff. The college is willing to buy 5,000 Christmas ornaments with their own design for $6.00 each. The company normally sells its decorations for $12.00 each. A break down of their costs is as follows:
Direct materials : $ 2.00
Direct labor : $ .50
Variable costs : $ 1.50
Fixed costs : $ 2.50
Total cost per unit: $ 6.50
Should Holiday Decorations Unique accept the special order made by the college ? The company has enough excess capacity to make this order.
Hubbard argues that the Fed can control the Fed funds rate, but the interest rate that is important for the economy is a longer-term real rate of interest. How much control does the Fed have over this longer real rate?
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