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svp [43]
3 years ago
6

In which of the following situations would each of the members be responsible for producing an equal share of the total amount o

f output sold by the cartel engaged in joint profit maximization?
A) When the amount of revenue generated by each member of the cartel is the same.

B) When there are no economies of scale in production.

C) When each member of the cartel is using the same scale of production.

D) When marginal costs of production are the same for each of the members of the cartel.
Business
1 answer:
Natasha_Volkova [10]3 years ago
8 0

Answer:

In which of the following situations would each of the members be responsible for producing an equal share of the total amount of output sold by the cartel engaged in joint profit maximization?

When marginal costs of production are the same for each of the members of the cartel.

Explanation:

D

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Sales revenues           $200,000              $80,000              $120,000

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Fixed costs:

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Net Income (Loss)       ($10,000)                 $5,000              ($15,000)

The results show that the Eastern Division made a net loss of $15,000 and the Western Division raked in a net income of $5,000, which resulted in the company-wide net loss of $10,000.  This loss could be traced to the allocated common fixed costs of the division, because its contribution to fixed costs was substantial and better than the Western Division's.

Explanation:

When the results of the operations of a divisional company like Lereve Company are prepared in segmental form, the performance pictures become clearer.  Management is enabled to focus on the segments or the factors that are generating the loss to the company.  Perhaps, as in this case, the problem may not be with the division, but the allocation of fixed costs to the divisions.  It can still be traced to the company as a whole, since it is generating much more fixed costs than it could afford from its revenue.

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