If an Item Is Ordered Using Its Economic Order Quantity

question 51

Multiple Choice

If an item is ordered using its economic order quantity, the annual carrying cost should be:

• A) slightly less than the annual ordering cost.
• B) equal to the annual ordering cost.
• C) twice the annual purchase price.
• D) the square root of the annual ordering cost.
• E) none of the above.

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Definitions:

Income Elasticity

A measure of how the quantity demanded of a good or service changes in response to changes in consumer income.

Normal Good

A good whose demand increases when consumer income rises.

Cross-price Elasticity

An indicator showing the responsiveness of the demand for a particular item to variations in the price of a different item.

Pineapples

Tropical fruits that are known for their sweet and tart flavor, commonly used in cooking and baking.