The Theory of Constraints

question 95

Multiple Choice

The theory of constraints:

• A)emphasizes long-term optimization.
• B)maintains that carefully managing production bottlenecks will increase operating income.
• C)helps managers make special one-time decisions.
• D)suggests that some component parts should be outsourced.

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Definitions:

Producer Surplus

The difference between what producers are willing to accept for a good or service versus what they actually receive, reflecting gains from trade.

Price Ceiling

A government-imposed limit on the maximum price that can be charged for a product or service.

Price Floor

A government-imposed minimum price charged for a commodity, intended to protect producers by ensuring prices do not fall below a certain level.

Consumer Surplus

The distinction in the total financial outlay consumers are prepared to make for a good or service and the outlay made.