Suppose You Are Thinking About Spending an Additional Hour Studying

question 53

Multiple Choice

Suppose you are thinking about spending an additional hour studying for your next microeconomics exam.You should spend that extra hour studying as long as

• A) the extra study time leads to a higher grade on the exam.
• B) your only other alternative is spending an hour reading a novel.
• C) the benefit of an additional hour of study is greater than what you have to give up in order to study one more hour.
• D) you enjoy studying microeconomics.

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Definitions:

Cash Realizable Value

The net amount of cash expected to be received from receivables, after accounting for allowances for doubtful accounts.

Accounts Receivable

Debts owed by customers to a company for delivered goods or performed services that remain unpaid.

Allowance

An accounting adjustment that reduces the value of an asset or increases a liability to reflect probable future costs.

Net Credit Sales

The total revenue from sales made on credit, minus any returns or allowances, reflecting the actual credit sales revenue generated by a business.