The management of Dando Corporation has provided the following data concerning its two products: The constrained resource is a particular machine that is available for 10,100 minutes each month.
-Up to how much should the company be willing to pay to obtain enough of the constrained resource to satisfy demand for the two existing products?
A) $40.00 per minute
B) $8.00 per minute
C) $4.00 per minute
D) $32.00 per minute

Question

The management of Dando Corporation has provided the following data concerning its two products:  The constrained resource is a particular machine that is available for 10,100 minutes each month.
-Up to how much should the company be willing to pay to obtain enough of the constrained resource to satisfy demand for the two existing products?
A) $40.00 per minute 
B) $8.00 per minute 
C) $4.00 per minute 
D) $32.00 per minute

Quizplus · Accepted Answer

The company should be willing to pay up to $4.00 per minute to obtain enough of the constrained resource to satisfy demand for the two existing products. This is because the marginal revenue from selling an additional unit of either product is $4.00.

The Management of Dando Corporation Has Provided the Following Data