The Production-Smoothing Motive for Holding Inventories Suggests That

Multiple Choice

The production-smoothing motive for holding inventories suggests that:

A) firms hold inventories in order to produce more output.
B) when sales are low, firms produce more than they sell and put the extra goods in inventories.
C) firms hold inventories to avoid losing sales.
D) when a product is only partly completed, its components are counted as part of the firm's inventory.