Answer the following statements true (T) or false (F)
1) Managers can reduce production or delivery costs by keeping an inventory of the goods they produce or sell.
2) Managers incur opportunity costs from holding goods in inventory.
3) The cost minimizing inventory sets the marginal benefit of increasing the order size equal to its marginal cost.
4) In most cases, the cost-minimizing order quantity depends on the variable cost per unit of ordering.
5) The optimal order quantity and the optimal inventory level increase as the cost of carrying a unit in inventory increases.
1) TRUE
2) TRUE
3) TRUE
4) FALSE
5) FALSE
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When there is a recessionary gap, (actual) Real GDP is __________ Natural Real GDP, and the (actual) unemployment rate is __________ the natural unemployment rate
A) greater than; less than B) greater than; greater than C) greater than; equal to D) less than; greater than E) less than; less than
How might the implementation of price controls have a negative effect?
a. by strengthening the market’s information-transmission system too much b. by closely aligning the economic decisions of households and firms c. by depriving the market price of its meaning for buyers and sellers d. by enforcing the equitable distribution of scarce resources.
Explain how the “Buy American” theme hurts Americans.
What will be an ideal response?
Which of the following combinations would unambiguously decrease the supply of money? a. The Fed pays a lower interest rate on bank reserves and increases the required reserve ratio
b. The Fed conducts an open market purchase of government securities and raises the discount rate. c. The Fed pays a higher interest rate on bank reserves and conducts an open market purchase of government securities. d. None of the above would unambiguously decrease the supply of money.