Use the Following to Answer Question(s): Measuring Consumer Surplus

question 236

Multiple Choice

Use the following to answer question(s) : Measuring Consumer Surplus

-(Exhibit: Measuring Consumer Surplus) If pizzas are $4 each, your consumer surplus is:

• A) $4.
• B) $6.
• C) $12.
• D) $18.

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Definitions:

Restocking Quantity

The quantity of inventory ordered to replenish stock levels to a predetermined amount.

Inventory Costs

The costs associated with storing, managing, and financing a company's inventory, including such things as warehousing and insurance.

Shortage Cost

Costs incurred when demand exceeds supply, including opportunity costs of not meeting customer demand and potential loss of sales.

Carrying Cost

The full expenditure of keeping stock on hand, covering expenses related to storing, managing, value reduction, and the cost of alternative opportunities forgone.