The opportunity cost of holding inventories is the:
A) real interest rate.
B) nominal interest rate.
C) raw materials used up in the production of inventories.
D) labor used in the production of inventories.

Question

Quizplus · Accepted Answer

The opportunity cost of holding inventories is the real interest rate because it represents the foregone return on investment that could have been earned if the funds were invested elsewhere, adjusted for inflation.

The Opportunity Cost of Holding Inventories Is The