A Toy Manufacturer Accumulates Inventories Because of the Uncertainty of the Demand

question 59

Multiple Choice

A toy manufacturer accumulates inventories because of the uncertainty of the demand for their product at Christmas and the desire not to lose any potential sales. This is an example of the motive for holding inventories.

• A)production smoothing
• B)inventories as a factor of production
• C)stock-out avoidance
• D)work in progress

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Definitions:

Domestic Investors

Individuals or entities within a country that allocate their own funds or capital into domestic investments such as stocks, bonds, and real estate.

Foreign Investment

Investment by individuals, firms, or governments in assets or enterprises in a country other than their own, usually for long-term growth or income.

Local Partner

A domestic firm that collaborates with a foreign company to conduct business within the local market.

Exchange Rates

The value of one currency expressed in terms of another currency.