Why do companies cut production when they find that their unplanned inventory investment is greater than zero?

Question:

Why do companies cut production when they find that their unplanned inventory investment is greater than zero? If they didn't cut production, what effect would this have on their profits? Why?

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For book-img-for-question

Economics of Money, Banking and Financial Markets

ISBN: 978-0321598905

9th Edition

Authors: Frederic S. Mishkin

See More Books

Question Posted: Aug 12, 2012 04:32 AM

See More Questions

Companies cut production when their unplanned inventory investment is greater than zero, because they are then producing more than they can sell. If they continue at current production, profits will...
False. In this case, if actual investment is greater than planned investment, firms are adding to inventory, thus unplanned inventory investment is positive. This leads firms to reduce production in...
Assume that the interest rate is greater than zero. Which of the following cash-inflow streams should you prefer? Year 1 Year 2 Year 3 Row A $500 $300 $100 Row B $100 $300 $500 Row C $300 $300 $300 1...
To save for her newborn son's college education, Lea Wilson will invest $1,000 at the beginning of each year for the next 18 years. The interest rate is 12 percent. What is the future value? 1)...
Let Yk denote the number of failures between successes k - 1 and k of a Bernoulli (p) random process. Also, let Yi denote the number of failures before the first success. What is the PMF PYk(y)? Is...
Oracle is the worlds largest enterprise software company. Its business is based on information: helping people use it, share it, manage it, and protect it. Using an Internet search engine, search...
Beginning with the score equations (11.4), verify the expression for the logit case in equation (11.5). a L() = x; (y; (x;)) i=1 '(x(B) (x)(1-(x)) = 0, (11.4)
A researcher estimates that the average height of the buildings of 30 or more stories in a large city is at least 700 feet. A random sample of 10 buildings is selected, and the heights in feet are...
Write a job advertisement for an External Auditor. Be sure to include the necessary skills and qualifications, duties and responsibilities for the auditor.
4. An experiment was performed to assess the relative effects of five fertilizers on the yield of a certain variety of sorghum. Five experimental plots were available at each of six locations...
Why does Friedmans view of the demand for money suggest that velocity is predictable, whereas Keyness view suggests the opposite?
Suppose that government policymakers decide that they will change taxes to raise aggregate output by $400 billion, and mpc = 0.5. By how much will taxes have to be changed?
State the objective of the audit of financial statements. In general terms, how do auditors meet that objective?
(i) Consider the general form of recursive preferences as defined in (9.16). Suppose that the functions $v$ and $\tilde{u}$ are of the following form: Show that in this case the preference...
1. Working alone, complete the What I Want from My Job survey. 2. In small groups, compare and analyze differences in the survey results and prepare group responses to the discussion questions. 3....
For the truss in Figure P8.4, compute (a) the vertical displacement of joint $C,(b)$ the horizontal displacement of joint $C$, and $(c)$ the horizontal displacement of joint $D$. Members \(A...
A market researcher is proposing a survey for the Big Tree Country Club, a private country club that is contemplating several changes in its layout to improve its golf course. The researcher is...
$\mathrm{A}+10 \mathrm{nC}$ charge is moved from point $\mathrm{c}$ to point $\mathrm{a}$. How much work is required in order to do this? A. $3.5 \times 10^{-6} \mathrm{~J}$ B. \(4.0 \times...
Describe how sexual harassment constitutes an abuse of organizational power and ways of reducing its occurrence.
Refer to Example 9.15. Add the following functionality to this program: Allow the user to enter the cost of a gallon of gas on each trip and use a function, Cost() to calculate the cost of purchasing...
How does Mondelezs marketing change the firms cost and revenue curves and its economic profit? Does average total cost at the profit-maximizing output increase or decrease? When the pandemic hit,...
Go to the St. Louis Federal Reserve FRED database, and find data on real government spending (GCEC1), real GDP (GDPC1), taxes (W006RC-1Q027SBEA), and the personal consumption expenditure price index...
Go to the St. Louis Federal Reserve FRED database, and find data on the personal consumption expenditure price index (PCECTPI), a measure of the price level; real compensation per hour (COM-PRNFB);...
The fact that it takes a long time for firms to get new plants and equipment up and running is an illustration of what policy problem?
9. You are trying to buy a new $275,000 Ferrari. You have $50,000 today that can be invested at your bank. The bank pays 4.8% annual interest on accounts. How long will it be before you have enough...
What do you think about marketing in general, and marketing analytics specifically? You can give examples of how your decision-making or work behaviors have changed as a result of your learning...
Outline the organization's current approach to marketing with examples (i.e. is it traditional or digital marketing or a combination of both?) and What their future marketing approach may look like...

Why do companies cut production when they find that their unplanned inventory investment is greater than zero?

Question:

Step by Step Answer:

Companies cut production when their unplanned inventory investment i...View the full answer

Economics of Money, Banking and Financial Markets

Students also viewed these Banking questions