William Is the Credit Manager for Timmy's Timbers,a Local Landscaping

question 127

Multiple Choice

William is the credit manager for Timmy's Timbers,a local landscaping company.Just recently,his mulch supplier noted on the invoice the terms of 3/15 net 30.What does this mean?

• A)Timmy's Timbers has to pay the invoice within 30 days. Late payment penalties are 3% if the bill is paid in less than 60 days, but they rise to 15% if payment is not made within 60 days.
• B)The entire amount is due in 30 days, but the 3% late penalty will only be imposed if payment is more than 15 days late.
• C)Timmy's Timbers Tree Farm must pay 15% of the amount due in 3 days; then the remaining 85% is due in 30 days.
• D)Timmy's Timbers will get a 3% cash discount if the balance owed to the supplier is paid within 15 days; otherwise the entire balance is due in 30 days.

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Definitions:

Competitive Market

A competitive market is a market structure characterized by a large number of buyers and sellers, where no single entity has the power to influence market prices significantly.

Free-rider Problem

A situation where individuals benefit from resources, goods, or services that they do not pay for, which can lead to underproduction or depletion of those resources.

Rivalry

The competitive relationship between firms in the market, striving to gain advantage over each other in terms of sales, market share, or innovation.

Nonexcludable

A characteristic of a good or service whereby it is not possible to prevent people who have not paid for it from having access to it.