A Firm Practices a Chase Strategy

Multiple Choice

A firm practices a chase strategy. Production last quarter was 1000. Demand over the next four quarters is estimated to be 900, 500, 1000, and 1000. Hiring cost is $20 per unit, and layoff cost is $5 per unit. Over the next year, what will be the sum of hiring and layoff costs?

A) $500
B) $2,500
C) $7,500
D) $7,000
E) $12,500