Question

Profit contribution equals total:

Select one:

a. revenue minus variable cost.

b. revenue minus fixed cost.

c. profit.

d. revenue minus total cost.

Slack variables:

Select one:

a. allow constraint equations to be expressed as inequalities.

b. measure excess capacity.

c. never equal zero.

d. in some cases have negative values.

The cost of capacity subject to constraints is:

Select one:

a. variable.

b. sunk.

c. semi-variable.

d. nonzero.

To determine the quantity to be produced by each production process at varying points along an isoquant, managers could use:

Select one:

a. the point-slope method.

b. slack variable method.

c. the relative distance method.

d. the relative cost method.

Unit costs are always constant if:

Select one:

a. input prices are constant.

b. the total cost function is linear.

c. constant returns to scale are operative.

d. input prices are constant and the total cost function is linear.

Answer 1

Answer 1- Option D is the correct answer. Profit is the amount of difference between total revenue and total cost. It can be positive or negative(loss).

Answer 2- Option A is the correct answer. Slack variables are always added to an inequality constraint.

Answer 3 - Option B is the correct answer. Capacity cost are generally fixed in nature and this cannot be recovered. So sunk cost is the right answer.

Answer 4- Option D is the right answer. This method helps to gind out the cost of each peoduct in the production peocess and divides the totaol sales by sale of each product to get the quantity produced or sold.