What Does the 80/20 Principle Propose

question 130

Multiple Choice

What does the 80/20 principle propose?

• A) Roughly 80 percent of the profit comes from 20 percent of the sales.
• B) Roughly 80 percent of a firm's customers are repeat business.
• C) Roughly 50 percent of a firm's customers purchase 80 percent of the sales volume of the product.
• D) Roughly 20 percent of a firm's customers purchase 80 percent of the sales volume of the product.
• E) Sales are equally divided among heavy,medium,and light users,but they all need slightly different products.

---

Definitions:

Present Value Factors

Multipliers used to calculate the present value of a future sum of money or stream of cash flows given a specific interest rate.

Compound Interest

Interest computed on the original amount of a deposit or loan, incorporating all previously accrued interest from past periods.

Desired Rate

Typically refers to the target interest rate set by individuals or businesses for financial returns or lending activities.

Average Rate of Return

An investment's return, expressed as a percentage, which is calculated by dividing the average annual profit by the initial investment cost.