Massa Machine Tool Expects Total Sales of $10,000

question 106

Multiple Choice

Massa Machine Tool expects total sales of $10,000.The price per unit is $5.The firm estimates an ordering cost of $7.50 per order,with an inventory carrying cost of $0.70 per unit.What is the optimum order size?

• A) 146 units
• B) 207 units
• C) 373 units
• D) 2,000 units

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Definitions:

Deadweight Loss

A decrease in economic efficiency due to the failure to achieve or the impossibility of achieving equilibrium for a good or service.

Price-Elastic

Describes a good's demand sensitivity to changes in price; high elasticity indicates demand is highly responsive to price changes.

Excise Tax

A tax paid on specific goods and services, such as tobacco and gasoline, usually levied at the point of manufacture or sale.

Tax Revenue

The revenue governments obtain from imposing taxes.