Costs of the firm that rise with increased levels of investment in its current assets are called:
A) Carrying costs.
B) Shortage costs.
C) Order costs.
D) Safety costs.
E) Trading costs.

Question

Quizplus · Accepted Answer

Carrying costs are the expenses associated with holding or "carrying" inventory and other forms of current assets. These costs typically increase as a firm invests more in its current assets, including expenses such as storage, insurance, and opportunity costs of the capital tied up in inventory.

Costs of the Firm That Rise with Increased Levels of Investment