Using Two Separate Graphs,illustrate a Flexible and a Restrictive Short-Term

question 43

Essay

Using two separate graphs,illustrate a flexible and a restrictive short-term financing policy.Place costs on the vertical axis and current assets on the horizontal axis.On each graph,indicate the shortage costs,carrying costs,total costs,and indicate the optimal investment in current assets.

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Definitions:

Difference Threshold

A measure of the smallest increase or decrease in a physical stimulus that is required to produce a difference in sensation that is noticeable 50% of the time.

Psychophysical Threshold

The minimum level of stimulus intensity perceived by the sensory system.

Just Noticeable Difference

The smallest difference in stimulation required to detect a change in sensory inputs, also known as the difference threshold.

Detectable Difference

The minimum change in a stimulus that can be correctly identified as different from a reference stimulus a certain proportion of the time.