Wilbur and Company reports sales of $20,000,000 and inventory of $4,000,000.Wilbur's inventory possesses significant economies of scale.Therefore,if Wilbur's sales increase by 10%,Wilbur's inventory will ________ and if Wilbur's sales decrease by 10%,Wilbur's inventory will ________.

Question

Quizplus · Accepted Answer

With economies of scale, inventory does not need to increase proportionally with sales. Therefore, if sales increase by 10%, inventory will increase by less than 10%. Similarly, if sales decrease by 10%, inventory will decrease by less than 10%.

Wilbur and Company Reports Sales of $20,000,000 and Inventory of $4,000,000.Wilbur's