If You Are in the Business of Selling Chicken and the Price

question 115

Multiple Choice

If you are in the business of selling chicken and the price of chicken and the price of beef both were to drop dramatically,what should you do with your inventory level of chicken?

• A) Keep it the same.
• B) Decrease the inventory.
• C) Increase the inventory.
• D) Get into the beef business.

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Definitions:

Quantity Supplied

The level of goods or services available for sale by producers, who are willing and able to provide them, at a predetermined price over an agreed period.

Excess Supply

A market condition where the quantity of a good supplied is greater than the quantity demanded at the current price.

Equilibrium Price

The price at which the quantity of a good or service demanded meets the quantity supplied, resulting in market balance.

Quantity Demanded

The total amount of a good or service that consumers are willing to purchase at a given price level.