If the Price of Labor or Some Other Variable Resource

question 407

Multiple Choice

If the price of labor or some other variable resource decreased, the

• A)AVC curve would shift upward.
• B)AFC curve would shift downward.
• C)AFC curve would shift upward.
• D)MC curve would shift downward.

---

Definitions:

Allowance for Doubtful Accounts

A contra-asset account that reduces the total accounts receivable balance to reflect accounts that are expected not to be collected.

Bad Debt Expense

An expense recognized when receivables are no longer collectible due to customer default.

Prompt Payment

A term describing the timely processing of payment to a vendor or creditor, often governed by contractual terms or regulations to ensure payments are made within an agreed-upon timeframe.

Accounts Receivable Turnover

A financial metric used to measure how efficiently a company collects revenue from its credit sales, calculated by dividing net credit sales by the average accounts receivable.