Which of the Following Statements Is True

question 71

Multiple Choice

Which of the following statements is true?

• A) As a general rule, management would want to reduce the firm's average collection period.
• B) As a general rule, management would want to reduce the firm's accounts receivable turnover ratio.
• C) As a general rule, management would want to increase the firm's average collection period.
• D) As a general rule, a firm is not financially affected by the amount of time required to collect its accounts receivable.

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Definitions:

Monopoly Power

The ability of a company or entity to control the price and supply of a product or service, due to the lack of competition in the market.

Long-run Equilibrium

A state in which all factors of production and costs are variable, and economic agents have fully adjusted to any economic changes, leaving no incentives for further adjustments.

Minimum Average Cost

The lowest point on the average cost curve, signifying the most efficient scale of operation for a firm.

Decreasing Cost

Decreasing cost refers to a situation where costs fall as the scale of production increases, often due to efficiencies or benefits gained from economies of scale.