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tatuchka [14]
3 years ago
6

Select the situation that will occur when a shortage of bread exists, and consumers pressure producers to change their actions.

Producers respond by supplying less bread. Producers respond by supplying the same amount of bread. Producers respond by supplying more bread.
Business
1 answer:
love history [14]3 years ago
7 0
The answer is : Producers respond by supplying more bread

When shortage of breads increases, the demand of the product will jump through the roof, which will also increase its price

To gain the maximum profit, the producers will respond by supplying more bread until the shortage is eliminated
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Answer:

Please find the detailed answer as follows

Explanation:

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--Transfer price per unit should be atleast equal to the relevant cost per unit.

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--Since it is stated that fixed cost wont be affected and that there is idle capacity available, there wont be any ‘Contribution margin lost’ on outside sale AND ‘avoidable fixed cost.  

--If Division A transfers, it would transfer at the relevant cost of $ 19 per unit, which is equal to the variable cost per unit.  

--If Division A didn’t transfer, Division B will buy from outside at rate of $ 24 per unit.

Hence, Division B will purchase $ 24 per unit when it could get from Division A at $ 19.

Thereby, Division will be paying $ 5 per unit extra on 16100 units.

Division B and hence, the company as a whole will be WORSE by $ 80,500

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Correct Answer = Option #3: Worse off by $ 80,500 each period.

The same is illustrated as attached image.

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