A Company Will Be Able to Obtain a Quantity Discount

question 11

Multiple Choice

A company will be able to obtain a quantity discount on component parts for its three products, X₁, X₂ and X₃ if it produces beyond certain limits. To get the X₁ discount it must produce more than 50 X₁'s. It must produce more than 60 X₂'s for the X₂ discount and 70 X₃'s for the X₃ discount. Which of the following pair of constraints enforces the quantity discount relationship on X₃?

• A) X₃₁ ≤ M₃Y₃, X₃₂ ≥ 50Y₃
• B) X₃₁ ≤ M₃Y₃, X₃₁ ≥ 50
• C) X₃₂ ≥ (1/50)X₃₁, X₃₁ ≤ 50
• D) X₃₂ ≤ M₃Y₃, X₃₁ ≥ 50Y₃

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Definitions:

Preferences

The subjective tastes and choices of consumers, which guide their decision-making in selecting among alternatives.

Laspeyres Price Index

A measure of the change in the overall price of a specific set of goods and services over time, using the quantities of the goods and services purchased in the base period.

Consumption Bundle

A combination of goods and services that a consumer chooses to consume at a given time.

Prices

The total monetary value expected, called for, or delivered in payment for an object.