During the Year, Caltech Inc

question 46

Multiple Choice

During the year, Caltech Inc.'s accounts receivable turnover rate increased from 10 to 12 times. The company makes credit sales only. The best explanation for the increase is that

• A)the company's credit department did a better follow up with customers whose account balances became past due.
• B)the company has recently dropped its credit check policy.
• C)the company makes all customers pay cash instead of allowing purchases to be charged.
• D)the company has more customers at the end of the year than it had at the beginning of the year.

Evaluate the effects of price changes on the demand for labor and other resources, considering the substitution and output effects.

Comprehend the role of marginal revenue product (MRP) and marginal resource cost (MRC) in resource hiring decisions.

Understand the implications of the law of diminishing returns on the MRP curve and hiring practices.

Identify how the productivity and market value of resources influence their demand.

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Definitions:

Store of Value

An asset that can be saved, retrieved and exchanged at a later time, and be predictably useful when retrieved.

Price Level

A measure of the average prices of goods and services in an economy, often used to assess inflation or deflation.

Severe Inflation

An extreme rate of inflation, characterized by a rapid and uncontrollable increase in prices, significantly eroding purchasing power.

Savings and Loan Associations

Banks and similar entities that focus on taking in savings from depositors and providing home loans along with other types of financing.