Blomstrom Products Inc

question 44

Multiple Choice

Blomstrom Products Inc. makes two products-N81W and V55S. Product N81W's selling price is $20.00 and its unit variable cost is $12.00. Product V55S's selling price is $108.00 and its unit variable cost is $97.20. The monthly demand is 3,940 units for product N81W and 1,140 units for V55S. The constrained resource is a particular machine that is available for 10,400 minutes each month. Each unit of product N81W requires 2 minutes on this machine and each unit of product V55S requires 6 minutes on this machine.
-Up to how much should the company be willing to pay to obtain enough of the constrained resource to satisfy demand for the two existing products?

• A) $4.00 per minute
• B) $1.80 per minute
• C) $8.00 per minute
• D) $10.80 per minute

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Definitions:

Labor Supply Curve

A graphical representation showing the relationship between the wages offered and the quantity of labor workers are willing to supply.

Monopsonistic Labor Market

A market condition where there is only one buyer (employer) for many sellers of labor, giving the buyer significant control over wages and employment conditions.

Upsloping Labor Supply Curve

A graphical representation showing an increase in the quantity of labor supplied as wages rise, under the assumption that higher wages incentivize more work effort.

Player Drafts

A process used in professional sports leagues for teams to select eligible players to join their rosters, often based on a system that aims to maintain competitive balance.