Your Boss Indicates That the Store's Stock/sales Ratio Is 5:1

question 89

Multiple Choice

Your boss indicates that the store's stock/sales ratio is 5:1.This means that _____ should be invested in inventory for every $1 of forecasted sales.

• A) $.20 (at retail price)
• B) $5 (at cost price)
• C) $5 (at retail price)
• D) $.20 (at cost price)
• E) $50 (at cost price)

---

Definitions:

Budget Line

A chart that displays every possible mix of two commodities that could be bought, given a particular financial plan, with unchanging prices.

Price Ratio

The ratio expressing the relative prices of two goods or services, indicating how much of one is needed to trade for one unit of the other.

Marginal Rate

Refers to the rate at which one quantity changes with respect to a change in another quantity, commonly used in the context of taxes and interest rates.

Substitution Effect

The change in consumption of goods in response to a change in their relative prices, holding the consumer's level of utility constant.