Which One of the Following Statements Is Correct for a Firm

question 38

Multiple Choice

Which one of the following statements is correct for a firm that currently has total costs of carrying and ordering inventory that are 50% higher than total carrying costs?

• A) Current order size is greater than optimal.
• B) Current order size is less than optimal.
• C) Per unit carrying costs are too high.
• D)The optimal order size is currently being used.

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Definitions:

Relatively Elastic

Refers to a situation where the quantity demanded or supplied of a good changes significantly in response to changes in price.

Percentage Increase

calculates the rate at which a quantity grows over a period, expressed as a fraction of its original value.

Elastic

Describes a scenario where a small change in price leads to a large change in quantity demanded or supplied.

Inelastic

describes a situation where the demand or supply for a good is not significantly affected by changes in price.