Desired Level of the Capital Stock

-Consider the two graphs above. Suppose there is increased concentration in the retail sector________. fewer, larger companies. This would ________ the desired level of inventories, as depicted in graph ________.

Question

Desired Level of the Capital Stock
 
-Consider the two graphs above. Suppose there is increased concentration in the retail sector________. fewer, larger companies. This would ________ the desired level of inventories, as depicted in graph ________.

Quizplus · Accepted Answer

Increased concentration in the retail sector means fewer, larger companies, and these larger companies have more power to negotiate lower prices from suppliers and hold less inventory to reduce their costs. Therefore, the desired level of inventories would decrease, as depicted in graph A (where the demand curve shifts to the left, leading to a lower equilibrium quantity).