Under the general decision rule for relaxing a constraint, managers are willing to pay:
A) Only what they pay now
B) Up to the entire contribution margin per unit of constrained resource
C) What they pay now plus some or the entire contribution margin per constrained resource
D) Less than what they pay now

Question

Quizplus · Accepted Answer

Under the general decision rule for relaxing a constraint, managers are willing to pay what they pay now plus some or the entire contribution margin per constrained resource. This means they are willing to pay more than what they are currently paying, up to the point where the additional cost is equal to or less than the additional revenue generated by relaxing the constraint. Therefore, the best choice is C.

Under the General Decision Rule for Relaxing a Constraint, Managers