Which of the Following Statements Is Correct for a Firm

question 33

Multiple Choice

Which of the following statements is correct for a firm that currently has total costs of carrying and ordering inventory that is 50 percent higher than total carrying costs?

• A)current order size is greater than optimal
• B)current order size is less than optimal
• C)per unit carrying costs are too high
• D)the optimal order size is currently being used

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Definitions:

Surplus

A situation where the quantity supplied of a good or service exceeds the quantity demanded at the current price.

Deflationary Gap

A situation where total spending (aggregate demand) in an economy is lower than the level required to sustain full employment output, leading to deflation and unemployment.

Equilibrium GDP

The level of Gross Domestic Product at which aggregate supply equals aggregate demand, leading to an economy operating at full capacity without inflationary pressures.

Full Employment GDP

The level of gross domestic product achieved when there is no cyclical unemployment in the economy, representing an ideal economic state where all willing and able workers find employment.