A Firm Is Analyzing a Relaxation of Credit Standards That

question 122

Multiple Choice

A firm is analyzing a relaxation of credit standards that is expected to increase sales 10 percent. The firm is currently selling 400 units at an average sale price per unit of $575, and the variable cost per unit is $400 at the current sales volume. The average cost per unit is $425. What is the additional profit contribution from sales if credit standards are relaxed?

• A) $23,000
• B) $16,000
• C) $6,000
• D) $7,000

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Definitions:

Brain

The organ in the head of humans and other vertebrates responsible for thought, memory, emotion, touch, motor skills, vision, breathing, temperature regulation, and other countless functions.

Structuralism

An approach in psychology that analyzes the basic elements of thoughts and sensations to understand the structure of conscious experience.

Functionalism

A theoretical approach in psychology that emphasizes the purpose and adaptiveness of mental and behavioral processes.

Critical Thinking

The process of thinking deeply and actively, asking questions, and evaluating the evidence.