Reading 16: Organizing Production LOS b习题精选 producing, 2010, company, increase

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LOS b: Discuss a company’s constraints and their impact on achievability of maximum profit.

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) technology constraint.

B) market constraint.

C) information constraint.

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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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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) Information.

B) Technology.

C) Markets.

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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.