Assume the Following Information from the Financial Statements of ReStateM

question 48

Multiple Choice

Assume the following information from the financial statements of ReStateM Company:
Net income $10,000
Depreciation expense $2,000
Salaries expense $5,000
Deferred income taxes $1,000
Change in accounts receivable $2,000
Change in accounts payable -$3,000
Change in inventory -$4,000
Capital expenditures $5,000
The change in net working capital for ReStateM Company is:

• A)Increase $7,000
• B)Decrease $7,000
• C)Increase $1,000
• D)Decrease $1,000

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Definitions:

Returns to Scale

Describes how output changes in response to a proportional increase in all inputs in the production process; can be classified as increasing, constant, or decreasing.

Consumer Surplus

The gap between the aggregate amount consumers are willing to pay for a good or service and the sum they actually pay.

Producer Surplus

The difference between the amount producers are willing to accept for a good or service relative to its market price, essentially the profit producers make.

Price Discrimination

Price discrimination occurs when a seller charges different prices for the same product or service to different customers, based on the willingness to pay, often to maximize revenue.