The Desired Level of Inventories Is the Level at Which

question 312

Multiple Choice

The desired level of inventories is the level at which the extra cost (in lost sales) from lowering inventories by a small amount is

• A) greater than the extra gain (in interest revenue and decreased storage costs).
• B) zero.
• C) less than the extra gain in (in interest revenue and decreased storage costs).
• D) just equal to the extra gain (in interest revenue and decreased storage costs).

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Definitions:

Labor Unions

Organizations formed by workers to protect their rights and interests through collective bargaining with employers.

Firm's Total Profit

The total income of a firm after subtracting all costs necessary to generate its revenue.

Firm's Total Profit

The total income of a firm after subtracting all costs from its total revenues.

Profit Maximizing

The process of adjusting production and sale levels to achieve the highest possible profit based on existing market conditions.