What Type of Cost Involved When Employing a Lawyer to Draft

question 2

Multiple Choice

What type of cost involved when employing a lawyer to draft and enforce a private contract between parties wishing to solve an externality problem

• A)an opportunity cost
• B)an implicit cost
• C)a sunk cost
• D)a transaction cost

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Definitions:

Cash Cycle

The period of time it takes for a business to convert its investments in inventory and other resources into cash flows from sales.

Inventory Turnover Rate

Inventory turnover rate measures how often a company sells and replaces its stock of goods during a certain period, indicating the efficiency of inventory management.

Collection Period

A financial metric that indicates the average number of days it takes a company to collect payments from its credit sales, essentially a detailed aspect of collection time with focus on receivables.

Accounts Receivable Balance

The accounts receivable balance is the total amount owed to a company by its customers for goods or services delivered on credit but not yet paid for.