Supler company produces a part used in the manufacture of one of its products. the unit product cost is $18, computed as follows:

direct materials = $8

direct labor = $4

variable manufacturing overhead = $1

fixed manufacturing overhead = $5

unit product cost (total of above costs) = $18

an outside supplier has offered to provide the annual requirement of 4,000 of the parts for only $14 each. it is estimated that 60 percent of the fixed overhead cost above could be eliminated if the parts are purchased from the outside supplier. based on these data, the per-unit dollar advantage or disadvantage of purchasing from the outside supplier would be:

$1 disadvantage

$1 advantage

$2 advantage

$4 disadvantage

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Aprice ceiling is “binding” if the price ceiling is set below the equilibrium price. suppose that the equilibrium price is $5. if a price ceiling is set at $6, this will not affect the market in any way since $5 remains a legally allowable price (since $5 < $6). a price ceiling of $6 is called a “non-binding” price ceiling. on the other hand, if the price ceiling is set at $4, the price ceiling is “binding” because the natural equilibrium price is $5 but that is no longer allowed. what happens when there is a binding price ceiling? at a price below the equilibrium price, quantity demanded exceeds quantity supplied. there is a shortage. normally, price increases eliminate shortages by increasing quantity supplied and decreasing quantity demanded. in this case, however, price increases are not allowed past the price ceiling. we therefore predict that the observed market price will be right at the price ceiling and there will be a permanent shortage. the observed quantity bought and sold will be dictated by the quantity supplied at the price ceiling. although consumers would like to buy more, there are no more units for sale

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Kendra knight took part in a friendly game of touch football. she had played before and was familiar with football. michael jewett was on her team. in the course of play, michael bumped into kendra and knocked her to the ground. he stepped on her hand, causing injury to a little finger that later required its amputation. she sued michael for damages. he defended on the ground that she had assumed the risk. kendra claimed that assumption of risk could not be raised as a defense because the state legislature had adopted the standard of comparative negligence. what happens if contributory negligence applies? what happens if the defense of comparative negligence applies?