Five-Eighths of Jim Bernard's Inventory Was Destroyed by Water Damage

question 99

Essay

Five-eighths of Jim Bernard's inventory was destroyed by water damage. He sold the remaining part, which was slightly damaged, for one-third of its value and received $5000.
a) What was the value of the destroyed part of the inventory?
b) What was the value of the inventory before the fire?

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Definitions:

Quantity

The amount or number of units of a product, good, or service available or demanded in a market.

Fixed Input(s)

Factors of production, such as land or machinery, that cannot be adjusted in the short term.

Short Run

A time period during which at least one input is fixed and cannot be adjusted by a firm.

Diseconomies Of Scale

Occur when a company grows so large that the costs per unit increase. It is the opposite of economies of scale.