In General, Most Businesses Should Take Advantage of a Cash

question 51

True/False

In general, most businesses should take advantage of a cash discount of 2/10 net 30 because the cost of not doing so is more expensive than the cost of borrowing.

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Definitions:

Economies of Scale

Cost advantages that enterprises obtain due to their scale of operation, with cost per unit of output generally decreasing with increasing scale as fixed costs are spread out over more units of output.

Price Elasticity of Demand

A measure of how much the quantity demanded of a good responds to a change in the price of that good.

Marginal Revenue

The additional income generated from selling one more unit of a good or service.

Target Market

The target market is a specific group of consumers at which a company aims its products and services, identified by demographic, geographic, or psychographic characteristics.