Suppose that in the year 2015, Oceanaire, Inc. planned to produce 525,000 units of its lightweight scuba tanks. Of the 525,000 it planned to produce, a total of 35,000 units would be added to the inventory at its new plant in Arizona. Also assume that these units have been selling at a price of $225 each and that the price has been constant over time. Suppose further that this year the firm built a new plant for $6 million and acquired $3.0 million worth of equipment. It had no other investment projects, and to avoid complications, assume no depreciation. Now suppose that at the end of the year, Oceanaire had produced 525,000 units but had only sold 485,000 units and that inventories now contained 40,000 units more than they had at the beginning of the year. At $225 each, that means that the firm added $9,000,000 in new inventory. This year Oceanaire actually invested S. (Enter your response as an integer.) Oceanaire planned to invest $(Enter your response as an integer) Oceanaire should produce OA less output next year since it needs to reduce its equipment. OB. more output next year since it needs to add to its equipment. OC. less output next year since it needs to reduce its unplanned investment. O D. more output next year since it needs to add to its unplanned investment.
Suppose that in the year 2015, Oceanaire, Inc. planned to produce 525,000 units of its lightweight scuba tanks. Of the 525,000 it planned to produce, a total of 35,000 units would be added to the inventory at its new plant in Arizona. Also assume that these units have been selling at a price of $225 each and that the price has been constant over time. Suppose further that this year the firm built a new plant for $6 million and acquired $3.0 million worth of equipment. It had no other investment projects, and to avoid complications, assume no depreciation. Now suppose that at the end of the year, Oceanaire had produced 525,000 units but had only sold 485,000 units and that inventories now contained 40,000 units more than they had at the beginning of the year. At $225 each, that means that the firm added $9,000,000 in new inventory. This year Oceanaire actually invested S. (Enter your response as an integer.) Oceanaire planned to invest $(Enter your response as an integer) Oceanaire should produce OA less output next year since it needs to reduce its equipment. OB. more output next year since it needs to add to its equipment. OC. less output next year since it needs to reduce its unplanned investment. O D. more output next year since it needs to add to its unplanned investment.
Chapter17: Capital And Time
Section: Chapter Questions
Problem 17.7P
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Transcribed Image Text:Suppose that in the year 2015, Oceanaire, Inc. planned to produce 525,000 units of its lightweight scuba tanks. Of the
525,000 it planned to produce, a total of 35,000 units would be added to the inventory at its new plant in Arizona. Also
assume that these units have been selling at a price of $225 each and that the price has been constant over time.
Suppose further that this year the firm built a new plant for $6 million and acquired $3.0 million worth of equipment. It
had no other investment projects, and to avoid complications, assume no depreciation.
Now suppose that at the end of the year, Oceanaire had produced 525,000 units but had only sold 485,000 units and
that inventories now contained 40,000 units more than they had at the beginning of the year. At $225 each, that means
that the firm added $9,000,000 in new inventory.
This year Oceanaire actually invested $. (Enter your response as an integer.)
Oceanaire planned to invest $(Enter your response as an integer.)
Oceanaire should produce
A. less output next year since it needs to reduce its equipment.
B. more output next year since it needs to add to its equipment.
OC. less output next year since it needs to reduce its unplanned investment.
OD. more output next year since it needs to add to its unplanned investment.
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