A Firm Is Analyzing a Relaxation of Credit Standards That

question 3

Multiple Choice

A firm is analyzing a relaxation of credit standards that is expected to increase sales 10 percent. The firm is currently selling 400 units at an average sale price per unit of $575, and the variable cost per unit is $400 at the current sales volume. The average cost per unit is $425. What is the additional profit contribution from sales if credit standards are relaxed?

• A) $6,000
• B) $23,000
• C) $16,000
• D) $7,000

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Definitions:

Prefrontal Cortex

The front part of the frontal lobes of the brain, crucial for decision making, social behavior, and personality expression.

GABA Receptors

Protein molecules in the brain that respond to the neurotransmitter gamma-aminobutyric acid (GABA), playing a key role in regulating nerve cell excitability and anxiety.

Physiological Changes

Modifications or alterations in the function or structure of body parts, organs, or systems due to various factors, including aging, disease, or environmental changes.

Cognitive Changes

Alterations in mental functions such as memory, problem-solving, and attention.