The criteria that firms apply to decide whether to produce a component part or purchase it in the market.
Concept Introduction:
Firms have to list criteria before deciding how to produce a component, based on objectives like profit-making, the cost involved, production limitations like resource availability, etc.
Explanation of Solution
Firms always have to decide between making a component or buying it outside. Their decision is always based on criteria like profit expectation and relevant cost of decision making.
Want to see more full solutions like this?
Chapter 14 Solutions
Bundle: ECON MICRO, 5th + Aplia, 1 term Printed Access Card
- 19 Question 19 options: The was a consumer sees the product as it compares to other similar products in the market isarrow_forwardConsumer price index (CPI) a measure of the overall cost of the goods and services bought by a rich consumer True or falsearrow_forward8.1 # 3: SHOW ALL WORK PLEASE. THANK YOUarrow_forward
- 7. Answer the given question. Do not round off answers while solving, instead just the final answer will be rounded off to two decimal places.arrow_forwardquestion 7 plesaearrow_forwardQuestion- A firm is considering an investment that will earn a 6% rate of return. If it were to borrow the money, it would have to pay 8% interest on the loan, but it currently has the cash, so it will not need to borrow. Should the firm make the investment?arrow_forward
- Sub part 6 and 7arrow_forwardPrepare an excel sheet for undergiven answers:please prepare excel sheet ....5. Cost of Inventory Sold: Cost of jeans sold: 16 * $19 = $304Cost of sweaters sold: 2 * $9 = $18Cost of purses sold: 2 * $27 = $54Cost of suits sold: 2 * $67 = $134Total Cost of Inventory Sold = $304 + $18 + $54 + S134 = S510 6. Gross Margin: Gross Margin = Total Gross Sales - Total Cost of Inventory Sold Gross Margin = $1,418 - $510 = $908 7. Direct Expenses for the Month: Advertising: $200Salaries: $500Rent expenses: S200Total Direct Expenses for the Month = $200 + $500 + 5200 = S900 Direct Expenses for the Day (assuming a 31-day month) = Total Direct Expenses for the Month / 31 Direct Expenses for the Day = $900 / 31 = $29.03 8. Indirect Expenses for the Month: Water: $75Electricity: $89Insurance: $60Total Indirect Expenses for the Month = $75 + 589 + 560 = 5224 Indirect Expenses for the Day (assuming a 31-day month) = Total Indirect Expenses for the Month / 31 Indirect Expenses for the Day = $224 / 31 =…arrow_forwardAnswer question 44arrow_forward
- Give correct typing answer with explanation and conclusion Pauli hire Hamish to build a four-drawer armoire for new home, to be completed by August 15. But Hamish calls Pauli on August 1 and says that he will not be able to complete the armoire on time.arrow_forwardThe price of Tesla Inc is approximately $776 billion as of 10/04/21. [The price Tesla = the number of Tesla shares outstanding (1 billion shares) * the share price of $776 = Tesla’s market capitalization.] What is your estimate of the value of Tesla Inc.? Please explain how you would estimate it and show your calculation.arrow_forwardAnswer question 9.69 using excel and show steps clearly pleasearrow_forward
- Managerial Economics: A Problem Solving ApproachEconomicsISBN:9781337106665Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike ShorPublisher:Cengage Learning