Which of the Following Statements Is Most Correct

question 9

Multiple Choice

Which of the following statements is most correct?

• A) If credit sales as a percentage of a firm's total sales increases, and the volume of credit sales also increases, then the firm's accounts receivable will automatically increase.
• B) It is possible for a firm to overstate profits by offering very lenient credit terms which encourage additional sales to financially "weak" firms. A major disadvantage of such a policy is that it is likely to increase uncollectible accounts.
• C) A firm with excess production capacity and relatively low variable costs would not be inclined to extend more liberal credit terms to its customers than a firm with similar costs that is operating close to capacity.
• D) Firms use seasonal dating primarily to decrease their DSO.
• E) Seasonal dating with terms 2/15, net 30 days, with April 1 dating, means that if the original sale took place on February 1st, the customer can take the discount up until March 15th, but must pay the net invoice amount by April 1st.

Explain the criteria for goods being rivalrous and excludable, and how these properties influence their classification.

Understand the implications of goods that are non-excludable and/or non-rival in terms of potential market failures.

Assess externalities and their impacts on social welfare.

Evaluate the role of public policy in addressing free-rider problems and externalities.

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Definitions:

Knowledge-based Economy

An economy driven by the use of knowledge and information as the key asset for growth and development.

Expert Power

Authority or influence derived from possessing knowledge or skills in a particular area.

Physical Resources

Tangible assets such as buildings, machinery, and raw materials that an organization uses to conduct its business.

Visibility

The degree to which an entity's presence, actions, or status is known and perceivable by others.