Question

Suppose the extra cost to a carnival of increasing its hours from 12 to 16 hours per day is $40,000 per year. The carnival should increase its hours from 12 to 16 hours per day if doing so results in an additional benefit of less than $40,000 per year.

A. True
B. False

Answer 1

No, the statement is false. The carnival should only increase its operational hours if the additional benefit is greater than the extra cost of $40,000.

Step-by-step explanation:

False. The carnival should consider increasing its hours from 12 to 16 hours per day if doing so results in an additional benefit that is greater than $40,000 per year, not less. The extra cost of $40,000 must be justified by bringing in more than that amount in additional revenue or benefit to make the extended hours financially worthwhile.

If the additional benefit is less than the extra cost, the carnival will incur a loss for the extended hours.

The statement is False. The carnival should only increase its hours from 12 to 16 if doing so results in an additional benefit of less than $40,000 per year. In this case, the extra cost of increasing the hours is $40,000 per year. This means that if the carnival increases its hours, it should expect to generate at least $40,000 in additional benefit to cover the cost.