ABC Corporation Produces Three Products, Standard, Deluxe and Superior, with the Following

question 113

Multiple Choice

ABC Corporation produces three products, Standard, Deluxe and Superior, with the following characteristics: The company has only 1,800 machine hours available each period.If demand exceeds the company's capacity, in what sequence should orders for the three products be filled to maximize the company's total contribution margin?

• A)Standard first, Deluxe second, Superior third
• B)Deluxe first, Standard second, Superior third
• C)Superior first, Standard second, Deluxe third
• D)Standard first, Superior second, Deluxe third

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Definitions:

Consumer Surplus

The cleavage between the cumulative amount that consumers are willing to disburse for a good or service and their actual expenditure.

Welfare Economics

The study of how the allocation of resources affects economic well-being.

Consumer Surplus

The difference between the total amount that consumers are willing to pay for a good or service and the total amount that they actually pay.

Consumer Surplus

The rift between the financial input consumers are willing to make for acquiring a good or service and the actual amount they spend.