All of the Following Are Examples of Carrying Costs Except

question 115

Multiple Choice

All of the following are examples of carrying costs except ______________.

• A) Rental payments on building where the business is located
• B) The lost sale if the company runs out of a particular model
• C) The opportunity costs associated with having capital tied up in current assets instead of more productive fixed assets
• D) All of these are examples of carrying costs

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Definitions:

Income Effect

The change in an individual's or economy's income and how that change will affect the quantity demanded of a good or service.

Substitution Effect

The change in consumption that results from a change in the relative price of goods, leading consumers to substitute away from higher-priced goods.

Income Effect

The income effect describes the change in an individual's or economy's income and how that change will affect the quantity demanded of a good or service.

Normal Good

A type of good for which demand increases as the income of the consumer increases, holding all else constant.