The Disadvantage of Building Up Inventory During the Off Season

question 33

Multiple Choice

The disadvantage of building up inventory during the off season to meet demand during peak seasons and keep production stable year round is

• A) very low inventory costs because no inventory needs to be carried from period to period.
• B) very high inventory costs because inventory needs to be carried from period to period.
• C) in the fact that a firm could get by with a smaller, less expensive factory.
• D) in the fact that a firm could get by with a larger, more expensive factory.
• E) None of the above are true.

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Definitions:

Distinct Industries

Different sectors of the economy that produce different types of goods or services, characterized by unique products, markets, and production processes.

Market Shares

The portion of a market controlled by a particular company or product.

Natural Monopoly

A natural monopoly occurs when a single firm can supply a market's entire demand for a good or service at a lower cost than any potential competitor, often due to high fixed or startup costs.

Antitrust Law

Legislation aimed at preventing anti-competitive practices, monopolies, and fostering fair competition in the market.