Mr Samuelson's Current Rates of Purchase Are Such That the Marginal

question 143

Multiple Choice

Mr. Samuelson's current rates of purchase are such that the marginal utility of slacks is 18 and the marginal utility of ties for him is 5. If slacks and ties are priced at $12 and $2, respectively, it can be concluded that Mr. Samuelson

• A) is spending too much on slacks and not enough on ties.
• B) is spending too much on ties and not enough on slacks.
• C) is spending his income in such a way as to maximize his satisfaction.
• D) should buy six times as many ties as he does slacks.

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Definitions:

Manufacturing Cycle Time

The total time taken from the start of production to the completion of the final product, including all processing and waiting times.

JIT Systems

Just-in-time production strategies that aim to reduce in-process inventory and carrying costs by producing only what is needed, when it's needed.

TPS

An acronym for Toyota Production System, a methodology that aims to increase efficiency by eliminating waste and improving production processes.