Fast Food Terminals II Taco Casa is considering installing touch ...

[DyllonKazuo]

Fast Food Terminals II Taco Casa is considering installing touch screen terminals for patrons to place their food orders. A terminal can typically accommodate the placement of 15 orders each hour while a human can process 20 orders each hour. If employee costs are 7.50/hour in wages and 4.50/hour in taxes, benefits and insurance, what is the per order opportunity cost of a touch screen?

Question 2

All of the following are true, except
 a. Some consumers may infer high quality from high price
 b. Low prices can indicate lower quality given that no other information is available
 c. Promotional campaigns do not affect consumer's perception on quality
 d. It makes more sense to raise price when advertising makes demand less elastic

[Bsand8]

Answer to Question 1

An employee has a per hour total compensation cost of 12.00 and can process 20 orders for 0.60 per order. But it only takes 4/3 touch screens to replace an employee (=20/15) making the opportunity cost per order 0.80 for the touch screen terminal.

Answer to Question 2

c