Extending the Credit Period Granted, with All Other Components of the Credit

question 25

Multiple Choice

Extending the credit period granted, with all other components of the credit policy remaining unchanged, will most likely cause:

• A)a decrease in sales.
• B)a decrease in bad debts.
• C)a decrease in accounts receivable.
• D)none of the above.

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Definitions:

Wage

The payment to labor for its contribution to the production process, typically calculated on an hourly, daily, or piecework basis.

Marginal Expenditure

Additional cost of buying one more unit of a good.

Factor of Production

Resource inputs used in the production of goods and services, typically categorized into land, labor, capital, and sometimes entrepreneurship.

Marginal Revenue Product

The additional revenue generated from using an additional unit of a resource or input.