Over Time in the Long Run We Expect Unplanned Inventory

question 27

Multiple Choice

Over time in the long run we expect unplanned inventory expenditure to:

• A) equal zero as planned inventories should equal actual inventories.
• B) increase because firms have a hard time figuring out what consumers want.
• C) be negative as firms will tend to reduce production is they think people won't purchase their product.
• D) be positive as on average firms tend to be optimistic about sales, but if they don't sell product they store it.

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Definitions:

Cone of Depression

A cone-shaped lowering of the water table around a pumping well, due to the removal of groundwater faster than it can be replenished.

Overpumped

A term usually related to groundwater resources, indicating a condition where water is removed from an aquifer at a rate faster than it can be replenished.

Aquifer

An underground layer of water-bearing permeable rock, rock fractures, or unconsolidated materials (gravel, sand, silt) from which groundwater can be extracted.

Karst Topography

A landscape formed from the dissolution of soluble rocks such as limestone, characterized by sinkholes, caves, and underground streams.