When demand is unexpectedly high, inventories will Blank______ as the quantity demanded Blank______ the factory's optimal output.

Question

Multiple choice question.

rise; is less than

rise; exceeds

fall; exceeds

fall; is less than

Answer 1

When demand is unexpectedly high, inventories will fall as the quantity demanded exceeds the factory's optimal output.

So, the correct choice is: fall; exceeds.