Firms React to Unplanned Increases in Inventories by

question 63

Multiple Choice

Firms react to unplanned increases in inventories by

• A) reducing output.
• B) increasing output.
• C) increasing planned investment.
• D) increasing consumption.

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Definitions:

Excess Demand

A situation in which the quantity demanded of a good or service exceeds the quantity supplied at a given price.

Queuing

The process of forming or waiting in a line, often applied to the theory studying the behavior of lines to improve service efficiency.

Rationing Mechanism

A system or method used to distribute scarce goods or services among competing users.

Price Floor

A government- or authority-imposed minimum price that can be charged for goods and services, typically above the equilibrium price, to prevent prices from falling too low.