Let D = Demand,S = Supply,P = Equilibrium Price,Q =

question 7

Multiple Choice

Let D = demand,S = supply,P = equilibrium price,Q = equilibrium quantity.What happens in the market for tropical hardwood trees if the government restricts the amount of forest lands that can be logged?

• A) D decreases, S no change, P and Q decrease
• B) S decreases, D no change, P increases, Q decreases
• C) D and S decrease, P and Q increase
• D) D no change, S decreases, P increases, Q increases

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Definitions:

Credit Policy

Guidelines that a company follows to determine the creditworthiness of customers, the terms of credit to extend, and how to collect payments.

Economic Order Quantity

A calculation used to determine the most cost-effective quantity of inventory to order, minimizing both ordering and holding costs.

Safety Stock

Additional inventory beyond expected demand, kept on hand to prevent stockouts typically caused by uncertainties in supply or demand.

Inventory

The total amount of goods and materials held by a company intended for sale or used in production, crucial for managing supply chains and fulfilling customer orders.