The Theory of Constraints Focuses on Maximizing Throughput Contribution Margin

question 91

Multiple Choice

The theory of constraints focuses on maximizing throughput contribution margin while minimizing all of the following except:

• A) selling expenses per unit sold.
• B) production bottlenecks.
• C) investment in buildings.
• D) investment in inventories.

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Definitions:

Reservation Price

The maximum or minimum price at which a consumer is willing to buy or sell a good or service.

Utility Function

A representation in economics that maps a set of goods and services into a numerical level of utility (satisfaction or happiness) that a consumer derives from those goods and services.

Good 1

Typically refers to a specific item or category of goods within an economic model, where multiple goods are being considered for analysis or comparison.

Revenue-maximizing Price

The price level at which a company can generate the maximum total revenue, balancing between price per unit and the quantity sold.