Ignoring the Risk of Theft,cash Balances Cannot Spoil,yet Managers Are

question 3

Multiple Choice

Ignoring the risk of theft,cash balances cannot spoil,yet managers are concerned with carrying costs.Why?

• A) Embezzlement is a real risk in most firms.
• B) Higher balances require additional supervisors.
• C) Cash balances are idle and face an opportunity cost.
• D) All of these.

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Definitions:

Production Function

A mathematical model that describes the output generated from combinations of inputs, such as labor and capital.

Expensive

Having a high price or cost, often relative to the value or affordability for the buyer.

Input

Refers to any resource or factor that is used in the generation of goods or services in a production process. (Duplicate rephrase)

Decreasing Returns

The phenomenon where an increase in the input of resources leads to a less proportional increase in output.