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

Understand the reasons behind the downward slope of the aggregate demand curve.

Comprehend the relationship between savings, investment, and the interest rate.

Relate inflation, employment, and GDP to economic theories.

Describe the historical context and evolution of economic thought from classical to Keynesian perspectives.

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Definitions:

Identity

is the way individuals perceive themselves, including their beliefs, characteristics, and expressions that distinguish them from others.

Leisure

Free time when one is not working or fulfilling duties and is free to engage in activities of personal choice.

Thorstein Veblen

An American economist and sociologist best known for his theories of conspicuous consumption and leisure class.

Theories of Science, Technology, and Society

Interdisciplinary frameworks that explore how scientific knowledge, technological innovations, and societal conditions influence each other.