Among Different Types of Costs Associated with Inventory, the Opportunity

question 34

Multiple Choice

Among different types of costs associated with inventory, the opportunity cost of the investment tied up in inventory is a(n) ________.

• A) purchasing cost
• B) ordering cost
• C) stockout cost
• D) carrying cost

Understand the concept of the reserve ratio and its implications for banks.

Calculate the maximum new loans a bank can extend based on its excess reserves.

Analyze the impact of Federal Reserve actions on the money supply.

Identify the components of a bank’s reserves.

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Definitions:

Profitable Output

The level of production at which a business or economic activity yields the maximum profit.

Firm

A business organization, such as a corporation, partnership, or sole proprietorship, that sells goods or services to consumers in exchange for money.

Total Profit

The overall financial gain made by a business after subtracting all costs from the total revenue generated from its operations.

AVC

Average Variable Cost; the total variable cost divided by the quantity of output produced.