The Opportunity Cost of Using One Unit of the Constrained

question 47

Multiple Choice

The opportunity cost of using one unit of the constrained resource in a volume trade-off decision is equal to:

• A) the profitability index for the company's best selling product.
• B) the profitability index for the product whose production would be cut back if necessary.
• C) the profitability index of the product with the fastest growing sales.
• D) the profitability index of the company's most profitable product.

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Definitions:

Actual Cause

Refers to the genuine reason that directly leads to an outcome or event, establishing a clear link between an action and its effect.

Res Ipsa Loquitur

A doctrine in tort law that allows the presumption of negligence by the defendant where the accident could not have happened without negligence and the instrument of injury was under the defendant's control.

Negligence

The failure to exercise the care that a reasonably prudent person would exercise in like circumstances, leading to unintended harm.

Proximate Cause

A legal concept that identifies the primary cause of damage or injury in a negligence lawsuit, determining the extent of a defendant's liability.