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Reading 16: Organizing Production - LOS b ~ Q1-2

1.Which of the following constraints to profit maximization most appropriately considers the prices and availability of the resources that a firm uses and the willingness of people to invest in the firm?

A)   Markets.

B)   Environment.

C)   Technology.

D)   Information.

2.A firm can increase its output and revenue if it changes to a new method of producing its good or service, but the profit the firm can earn by doing so is limited by the cost of implementing the new production method. This is best described as a(n):

A)   market constraint.

B)   regulatory constraint.

C)   technology constraint.

D)   information constraint.

thanks a lot

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答案和详解如下:

1.Which of the following constraints to profit maximization most appropriately considers the prices and availability of the resources that a firm uses and the willingness of people to invest in the firm?

A)   Markets.

B)   Environment.

C)   Technology.

D)   Information.

Click for Answer and Explanation A)

Markets present constraints on the firm’s growth. Market constraints include the prices and availability of the resources that a firm uses and the willingness of people to invest in the firm.

2.A firm can increase its output and revenue if it changes to a new method of producing its good or service, but the profit the firm can earn by doing so is limited by the cost of implementing the new production method. This is best described as a(n):

A)   market constraint.

B)   regulatory constraint.

C)   technology constraint.

D)   information constraint.

Click for Answer and Explanation C)

This is a technology constraint. A firm can increase its output and revenue by adding more technological resources. To do so the firm must incur additional costs. The costs of adopting the new technology limit the additional profit the firm can realize.

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