Increasing a Credit Period from 30 to 60 Days, in Response

question 16

Multiple Choice

Increasing a credit period from 30 to 60 days, in response to a similar action taken by company's competitors, would likely result in:

• A) An increase in the average collection period.
• B) A decrease in bad debt losses.
• C) An increase in sales.
• D) Higher profits.

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Definitions:

Output

The total amount of goods or services produced by a firm or country.

Demand

How much of a good or service that consumers can and want to buy, influenced by differing price levels.

Economic Profit

The difference between total revenues and total costs, including both explicit and implicit costs, representing the surplus generated from economic activities.

Technological Change

A change in the methods, equipment, and software used by a society, improving efficiency, productivity, and quality of life.