Donny, of Donny's Doughnuts, bakes and sells 100 dozen doughnuts a day using one mixer and one fryer. His rival, Sunshine, of Sunshine's Doughnuts, produces 180 dozen doughnuts a day using two mixers and two fryers. Both shops use the exact same technology to make doughnuts and have the same number of workers and the same size building.

Donny and Sunshine both increase their capital equipment by one mixer and one fryer.

Which shop will benefit the most from its expansion?

O The shops will benefit equally because they are using the same quantity of equipment.

O Donny, because his workers currently have less available capital to work with.

O The local weight-loss clinic, because the number of doughnuts consumed will increase.

O Sunshine, because her operation was producing more doughnuts to start with.

Question

Business

Sariah Hudson

16 February, 17:06

Donny, of Donny's Doughnuts, bakes and sells 100 dozen doughnuts a day using one mixer and one fryer. His rival, Sunshine, of Sunshine's Doughnuts, produces 180 dozen doughnuts a day using two mixers and two fryers. Both shops use the exact same technology to make doughnuts and have the same number of workers and the same size building.

Donny and Sunshine both increase their capital equipment by one mixer and one fryer.

Which shop will benefit the most from its expansion?

O The shops will benefit equally because they are using the same quantity of equipment.

O Donny, because his workers currently have less available capital to work with.

O The local weight-loss clinic, because the number of doughnuts consumed will increase.

O Sunshine, because her operation was producing more doughnuts to start with.

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Answers (1)

Know the Answer?

Ramos · Answer 1

Donny, because his workers currently have less available capital to work with.

Explanation:

As the workers are constant in both companies and Sunshine already have two mixer and fryers. Thus, all its workers are already busy, but that of Donny's Doughnuts are not that busy, and can make effective utilization of such newly added mixer and fryer.

Accordingly, the capital will be adding the value to the company, but in case of Sunshine it might just add up in the cost and might not get such effective results. As the capital will be useless in case of no labors are present to work on such capital equipment.