Acme Company Has an Agreement with a Major Credit Card

question 73

Multiple Choice

Acme Company has an agreement with a major credit card company which calls for cash to be received immediately upon deposit of Acme customers' credit card sales receipts.The credit card company receives 3.5% of card sales as its fee.If Acme has $2,000 in credit card sales,which of the following statements are true?

• A)Acme debits Cash $2,000
• B)Acme debits Cash $1,930
• C)Acme debits Accounts Receivable - Credit Card Co $2,000
• D)Acme debits Accounts Receivable - Credit Card Co $1,930
• E)Acme credits Sales $1,930

---

Definitions:

Cost-output Elasticity

A measure of how responsive the total cost of production is to a change in the quantity produced.

Long-run Cost Function

A representation of the relationship between output and the cost of production when all inputs, including capital, can be varied.

Short-run Cost Function

The costs a company incurs in the production of goods or services within a short period, considering some inputs are fixed.

Long-run Cost Curve

A graphical representation showing the minimum cost at which a firm can produce any given level of output in the long run, when all inputs are variable.