Product a requires 5 machine hours per unit to be produced, product b requires only 3 machine hours per unit, and the company's productive capacity is limited to 240,000 machine hours. product a sells for $16 per unit and has variable costs of $6 per unit. product b sells for $12 per unit and has variable costs of $5 per unit. assuming the company can sell as many units of either product as it produces, the company should:

When viewed in terms of company assumptions, companies must choose which products will be produced more, for example, if product A will be produced more, then the quantity of product B must be reduced. That way both products A and product B will sell well in the market, this is by the Ceteris Paribut principle.

What are the assumptions? In general, the definition of an assumption is a temporary presumption or conjecture that cannot be proven right and requires direct verification.

There are several types of assumptions, namely: economics, philosophy, and research. But in this discussion, it will be explained about economic assumptions because it has a connection with the problem above.

Economic Assumptions

The assumptions in the economy are almost the same as the explanation above, but the context is only in the economic field. One example of a widely used economic assumption is the Ceteris Paribus assumption.

The Caeris Paribus assumption is used to express the relationship between the price and quantity of goods, which is to reduce complex factors that simplify various formulas in the economy.

For example, the law of supply and demand states that if the number of requests exceeds the amount of supply, the price of goods will rise, assuming ceteris paribus or other variables are considered constant. The ceteris paribus assumption here is needed so that the output or output of the law of supply and demand remains valid because some unexpected factors or variables can make predictions made by the law wrong.

Examples of variables that can change the legal output of demand and supply, for example, are the substitute goods that can be used instead of the intended goods. The existence of substitute goods makes the price of the goods in question will not rise, even though the number of requests exceeds the supply amount.

Learn more

Principles of Ceteris Paribut ,

Details

Class: High School

Subject: Business

Keyword: company assumptions

answer; organizational;