Final answer:
The statement that a percentage increase in receivables greater than the increase in sales leads to a decrease in sales returns and bad debts does not necessarily follow. It could indicate slower payment times or changes in credit policy. Elasticity considerations and the interplay of price and quantity also play a role in total revenue outcomes.
Step-by-step explanation:
If the percentage increase in receivables for Petro Corporation is greater than the percentage increase in sales, it doesn't necessarily imply a decrease in sales returns and bad debts. This situation could indicate several other issues or strategies in play.
For example, it might suggest that Petro Corporation's customers are taking longer to pay their bills or that Petro Corporation has extended more generous credit terms to improve sales, potentially leading to higher receivables. It's important to note that a given percentage rise in price (P) that is more than offset by a larger percentage fall in quantity (Q) could lead to a fall in total revenue (P x Q). In this context, elasticity considerations could inform pricing strategies. If elasticity is 1, the advice might be to maintain current pricing to keep total revenue maximized. Regarding the change in financial market conditions leading to an increase in the quantity of loans made and received, factors such as lowered interest rates or improved economic forecasts might have such an effect.