Use the Information Below to Answer the Following Questions

question 13

Multiple Choice

Use the information below to answer the following questions.
Fact 14.3.3
Suppose that Roots' marginal cost of a jacket is a constant $125.00 and the total fixed cost at one of its stores is $1,500 a day. This store sells 20 jackets a day, which is its profit-maximizing number of jackets. Then the stores nearby start to advertise their jackets. The Roots store now spends $2,000 a day advertising its jackets, and its profit-maximizing number of jackets sold jumps to 70 a day.
-Refer to Fact 14.3.3. If the nearby firms' advertising decreases the demand for Roots' jackets and makes the demand more elastic, the price of a Roots' jacket ________. If Roots' advertising increases the demand for Roots' jackets and makes the demand less elastic, the price of a Roots' jacket ________.

• A)falls; rises
• B)rises; rises
• C)rises; falls
• D)falls; falls
• E)does not change; does not change

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Definitions:

Cycle-Counting Personnel

Employees responsible for periodically counting inventory items to ensure accuracy without interrupting daily operations.

Inventory Holding Cost

The total cost incurred by holding inventory, including storage, insurance, spoilage, and opportunity costs.

Carrying Costs

Expenses associated with maintaining inventory, including storage, insurance, and opportunity costs.

Cycle Counting

An approach to stock audit where a limited selection of the inventory at a defined site is enumerated on a chosen date.