When Using the Bardahl Formula, an Increase in Accounts Payable

question 56

Multiple Choice

When using the Bardahl formula, an increase in accounts payable (while holding purchases and operating expenses constant) has which of the following effects on the working capital requirements?

• A)increase
• B)decrease
• C)no effect
• D)increase, decrease, or no effect, depending on other factors

---

Definitions:

Cobb-Douglas Production Function

Production function of the form q = AK^aL^b, where q is the rate of output, K is the quantity of capital, and L is the quantity of labor, and where A, a, and b are constants.

Optimal Input Demands

The combination of inputs that minimizes the cost of producing a given output or maximizes output for a given cost.

Expenditures

Money spent on goods, services, or other expenses.

Scale Economies Index

A measurement that assesses the advantages a business gains due to the scale of its operation, typically resulting in reduced costs per unit as production increases.