Table 3-4 Assume That the Farmer and the Rancher Can Switch Between

question 285

Multiple Choice

Table 3-4
Assume that the farmer and the rancher can switch between producing meat and producing potatoes at a constant rate.

-Refer to Table 3-4.The farmer should specialize in the production of

• A) meat and the rancher should specialize in the production of potatoes.
• B) potatoes and the rancher should specialize in the production of meat.
• C) both goods and the rancher should specialize in the production of neither good.
• D) neither good and the rancher should specialize in the production of both goods.

---

Definitions:

Restocking Quantity

The quantity of inventory ordered to replenish stock levels to a predetermined amount.

Inventory Costs

The costs associated with storing, managing, and financing a company's inventory, including such things as warehousing and insurance.

Shortage Cost

Costs incurred when demand exceeds supply, including opportunity costs of not meeting customer demand and potential loss of sales.

Carrying Cost

The full expenditure of keeping stock on hand, covering expenses related to storing, managing, value reduction, and the cost of alternative opportunities forgone.