The Existence of a Shortage

question 444

Multiple Choice

The existence of a shortage

• A) means resources are being allocated efficiently.
• B) is impossible in a market economy.
• C) pushes the price up.
• D) pushes the price down.

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Definitions:

Current Ratio

A liquidity ratio that measures a company's ability to pay short-term obligations by comparing current assets to current liabilities.

Inventory Turnover Ratio

A measure of how frequently a company sells and replaces its inventory over a certain period; calculated as cost of goods sold divided by the average inventory.

Inventory Turnover Ratios

A financial metric indicating the number of times a company’s inventory is sold and replaced over a specified period, critical for evaluating inventory efficiency.

Quick Ratios

A financial metric used to gauge a company's liquidity by comparing its most liquid assets, without inventory, to its current liabilities.