Reference no: EM13889126
1. What type of cost has NO impact on determining the profit-maximizing sales quantity?
a. Avoidable fixed costs
b. Sunk fixed costs
c. Variable costs
d. Average variable costs
2. Dan is the owner of a price-taking company that manufactures sporting goods. One particular facility Dan owns produces baseball bats and baseball gloves. His cost function for baseball bats is CB (QB, QG) = 100QB + QB2 + QBQG and the marginal cost is MCB = 100 + 2QB + QG, where QB is the output level for bats and QG is the output level for gloves. Dan's cost function for baseball gloves is CG (QB,QG) = 50QG + QG2 + QGQB, and the marginal cost is MCG = 50 + 2QG +QB. The price of a baseball bat is $240 and the price of a baseball glove is $150. What is the profit-maximizing sales quantity for baseball bats?
a. 10
b. 20
c. 30
d. 60
3. To earn the greatest possible profit, a firm must:
a. maximize revenue less cost.
b. minimize revenue less cost.
c. maximize quantity at any price.
d. maximize price at any quantity.
4. In which situation might a company NOT want to maximize profit?
a. A small business owner who sells a highly specialized product at a high price in order to compete with more established businesses in the area
b. A family-owned company that has to decide between hiring a family member and hiring a highly-qualified external candidate
c. A conglomerate with a highly streamlined supply chain who sells generic goods
d. A corporation that has performed poorly in the last two quarters and is looking for new upper-management
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