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:

Corpus

The principal amount in a trust or estate as distinct from interest or dividends earned on that principal amount.

Holographic

Referencing a document, especially a will, entirely written in the handwriting of the person whose signature it bears, often exempt from normally required formalities.

Nuncupative

Pertains to a will that is declared orally by the testator in the presence of witnesses, usually under circumstances where a written will cannot be produced.

Prudence

Exercising caution or care in the management of resources or decision-making to avoid unnecessary risks.