If a Firm Has Limited Production Capacity in One Part

question 16

Multiple Choice

If a firm has limited production capacity in one part of a sequential production operation, it can maximise profits by producing those items having the highest:

• A) contribution margin per unit of the scarce resource.
• B) selling price.
• C) gross profit.
• D) profit.

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Definitions:

Act of God

An unforeseeable natural event, such as an earthquake, flood, or tornado, that cannot be prevented and is excluded from legal liability.

Libel

Defamation in some permanent form, such as in writing, a cartoon, etc.

Defence to Negligence

Legal reasons provided by a defendant in a lawsuit to prove they were not negligent or to mitigate their level of responsibility for an incident.

Waiver

The deliberate act of relinquishing a right, claim, or privilege.