Brendon's Bakeries Uses 4,000 Pounds of Flour a Year

question 56

Multiple Choice

Brendon's Bakeries uses 4,000 pounds of flour a year. If the ordering cost is $10 per order and the holding cost is $2 per pound, then the optimal quantity to order flour is _____.

• A) 200 pounds
• B) 300 pounds
• C) 400 pounds
• D) 500 pounds

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Definitions:

Purely Competitive

A market structure characterized by a large number of small firms, a homogeneous product, and free entry and exit in the market.

Herfindahl Index

A measure of the size of companies in relation to the industry and an indicator of the amount of competition among them.

Market Shares

The proportion of total sales or revenue in a market accounted for by a particular company, indicating its dominance in the market.

Economic Profits

The difference between total revenue and total costs, including both explicit and implicit costs, representing the excess that remains after all costs have been accounted for.