1. A firm is considering buying 30,000 units of a component used in one of its product instead of making it. The incremental costs of making the product is $10 per unit and it can buy a component of equal quality for $12 per unit. If the firm buys the unit, then it can rent the freed up factory space for $50,000. Which of the following is true?

A. The firm should buy the component because it will be $50,000 better off

B. The firm should buy the component because it will be $10,000 better off

C. The firm should not buy the component because it will be $60,000 worse off

D. The firm should not buy the component because it will be $10,000 worse off

Choose the correct answer (multiple choice)