Use the Following Situation to Answer the Question : Situation

question 27

Multiple Choice

Use the following Situation to answer the question : situation 20-1
Assume a closed economy with no government. Suppose that autonomous consumption equals $400, planned investment equals $500, and the mpc equals 0.9.

-Using the information in Situation 20-1,if aggregate output is equal to $10,000,then unplanned inventory investment equals

• A)-$1,000.
• B)-$100.
• C)$0.
• D)$100.

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Definitions:

Economic Order Quantity

is a formula used by businesses to determine the optimal amount of inventory to order at one time, aiming to minimize holding and ordering costs.

Variable Cost

Costs that vary directly with the level of production or service delivery.

Carrying Cost

Expenses associated with holding or storing inventory, including insurance, storage, and opportunity costs of invested capital.

Net Present Value

The difference between the present value of cash inflows and the present value of cash outflows over a period, used in capital budgeting to analyze the profitability of an investment.