How Many Years Does It Take for an Inventory Error

question 146

Multiple Choice

How many years does it take for an inventory error to correct itself assuming the ending inventory count in the second year is correct?

• A) 1
• B) 2
• C) 3
• D) 4

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Definitions:

Income Elasticity

Measures how the quantity demanded of a good changes in response to a change in consumers' income.

Normal Good

A type of good for which demand increases as the income of consumers increases, and decreases when consumer income decreases.

Inferior Good

A type of good for which demand decreases as the income of consumers increases, opposite of a normal good.

Normal Good

A good for which demand increases as the income of the consumer increases.