In the long run, unplanned inventory expenditure will:
A) equal zero, as planned inventories should equal actual inventories.
B) increase, as firms struggle to figure out what consumers want.
C) decrease, as firms are able to better match production with consumer preferences.
D) become positive, as firms tend to be optimistic about sales.

Question

Quizplus · Accepted Answer

In the long run, firms adjust their production and inventory levels based on actual sales data and forecasts, aiming to align planned inventories with actual inventories. This adjustment process means that unplanned inventory expenditure should theoretically equal zero, as discrepancies between planned and actual inventories are corrected over time.

In the Long Run, Unplanned Inventory Expenditure Will