Question

A company sells 100 boxes of chocolate,yet it only produced 90 boxes of chocolate during the year.Which of the following is true?

A) It is impossible to sell more than is produced.
B) Inventory investment must be negative.
C) The price of the chocolate must have gone up.
D) The firm must have acquired the extra 10 boxes from another company.
E) The firm sold the chocolate but must have given 10 people an IOU.

Answer 1

Answer: B. Inventory investment must be negative.

Step-by-step explanation:

Inventory investment simply means the difference between the goods that are produced and the goods that are sold by a company during a given year. Inventory investment is given as:

= Production - Sales

Since the company sells 100 boxes of chocolate, but produced 90 boxes of chocolate during the year, then the inventory investment will be:

= 90 - 100

= -10

Therefore, the inventory investment is negative.