When Financial Managers Take Action to Minimize the Carrying Costs

question 70

Multiple Choice

When financial managers take action to minimize the carrying costs of current assets, they:

• A)Are likely to maximize profits
• B)Also consider spoilage costs
• C)May increase costs due to shortages
• D)Engage in the matching of maturities

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Definitions:

Housing Shortages

A situation in a housing market where the demand for homes exceeds the supply, leading to increased prices and decreased affordability.

Price Floor

A government- or authority-imposed minimum price that can be charged for a good or service to prevent prices from dropping too low.

Equilibrium Price

The price at which the quantity of a good or service demanded by buyers equals the quantity supplied by sellers.

Rationing Mechanism

A system designed to allocate goods or services among interested users, often used when demand exceeds supply.