In Figure 5

question 64

Multiple Choice

In Figure 5.8, if the supply curve moves from S2 to S5

• A)The firm will make a smaller economic profit than they used to
• B)The firm will go from making an economic profit to a normal profit
• C)The firm will go from making an economic profit to a loss but one that is not big enough to make it want to shutdown.
• D)The firm will go from making an economic profit to a loss that is big enough to make it want to shutdown.

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Definitions:

Allowance Method

An accounting technique used to account for bad debts by estimating and recording uncollectible accounts receivable.

Outstanding Receivables

The total amount of money owed to a company by its customers for goods or services delivered but not yet paid for.

Allowance for Doubtful Accounts

A reserve for accounts receivable that may not be collectable, reducing the book value of accounts receivable to a more realistic value.

Cash Loan

A financial agreement where a borrower receives a specific amount of cash from a lender and commits to repaying it over time, along with interest.