What Should a Firm Faced with a Production Constraint Do

question 93

Multiple Choice

What should a firm faced with a production constraint do to maximize total contribution margin?

• A) Promote those products having the highest unit contribution margins.
• B) Promote those products having the highest contribution margin ratios.
• C) Promote those products having the highest contribution margin per unit of constrained resource.
• D) Promote those products having the highest contribution margins and contribution margin ratios.

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Definitions:

Producers' Reactions

The manner in which producers in a market respond to changes in market conditions, such as changes in input costs, technological advancements, or shifts in consumer demand.

Price Ceiling

A government-imposed limit on the price charged for a product, intended to keep prices low for consumers.

Price Support

Government interventions or policies designed to maintain the market price of a commodity or product at a certain level.

Government Policy

Actions and strategies that governments enact to achieve economic, social, or political objectives.