All Else the Same, ________ Costs Are Greatest When the Firm

question 75

Multiple Choice

All else the same, ________ costs are greatest when the firm holds a small quantity of inventory, and ___________ costs are greatest when there is a large quantity of inventory on hand.

• A) Carrying; interest.
• B) Opportunity; restocking.
• C) Restocking; carrying.
• D) Carrying; restocking.
• E) Interest; carrying.

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Definitions:

Corporate Sector

Refers to the segment of an economy comprised of private and publicly traded corporations, involved in commercial and industrial activities.

Noncorporate Sector

Parts of the economy that are not incorporated as businesses, including households, sole proprietorships, and some partnerships.

Excess Burden

The amount by which the burden of a tax exceeds the total revenue collected. Also called deadweight loss.

Tax Revenue

The revenue collected by governments from taxes.