Assume the Demand for Product Y Increases and the Subsequent

question 87

Multiple Choice

Assume the demand for product Y increases and the subsequent market system responses result in the production of more Y.This illustrates:

• A)that the concept of derived demand is inapplicable.
• B)that consumer sovereignty is inoperative in this economy.
• C)the scarcity function of prices.
• D)the directing or guiding function of prices.

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Definitions:

Annual Inventory Cost

The total costs associated with holding and managing inventory over a year, including costs related to storage, insurance, and obsolescence.

Average Inventory

The mean value of an entity's inventory over a certain period of time, used in business to help manage stock levels effectively.

Storage Cost

Expenses associated with storing goods or inventory, including warehouse rent, utilities, and handling charges.

Ordering Cost

The expenses associated with placing and processing orders for goods or materials, including administrative costs and communications expenses.