If a Company Has Demand of 1,600 Units for the Month

question 44

Multiple Choice

If a company has demand of 1,600 units for the month of May and a beginning of 900 units, and if X_m = production in May and L_m = the number of lost sales in May, which of the following represent the material-balance constraint?

• A)X_m - I_m + 900 + L_m = 1,600
• B)X_m + I_m - 900 + L_m = 1,600
• C)X_m - I_m + 900 - L_m = 1,600
• D)-X_m - I_m + 900 - L_m = 1,600

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Definitions:

Saving

The portion of income not spent on current consumption but reserved for future use.

Total Income

The aggregate amount of income received by an individual or household from all sources before taxes or deductions.

Utility Function

A mathematical representation of how a consumer derives satisfaction or utility from consuming various amounts of goods or services.

Demand Function

A mathematical relationship that illustrates the quantity of a product or service consumers are willing to buy at various prices.