Figure 8-3

question 12

Multiple Choice

Figure 8-3. Martin Company uses 625 units of a part each year.The cost of placing one order is $8; the cost of carrying one unit in inventory for a year is $4.
Refer to Figure 8-3.Martin has decided to begin ordering 40 units at a time.What is the average annual carrying cost of Martin's new policy?

• A)$80
• B)$60
• C)$160
• D)$4
• E)$90

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Definitions:

Equilibrium Interest Rate

The interest rate at which the demand for funds (borrowing) equates with the supply of funds (savings) in the financial market.

Demand for Loanable Funds

The desire for borrowing money, driven by the need for investment funds across the economy.

Quantity of Loanable Funds

This refers to the amount of money available for borrowing in the financial market at a particular rate of interest.

Demand-for-loanable-funds

The desire or need for borrowing money, driven by individuals, businesses, or governments, often influenced by interest rates.