When Goods Are Sold to a Customer with Credit Terms

question 17

Multiple Choice

When goods are sold to a customer with credit terms of 2/15,n/30,the customer will receive a:

• A)15% discount if they pay within 2 days.
• B)2% discount if they pay 15% of the amount due within 30 days.
• C)15% discount if they pay within 30 days.
• D)2% discount if they pay within 15 days.

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Definitions:

Price Ceiling

A government-imposed limit on how high a price can be charged for a product or service, often set below the equilibrium price to keep goods affordable.

Consumer Surplus

The disparity between what consumers are ready and able to spend for a product or service and the amount they end up paying.

Price

The financial expenditure involved in obtaining a product or service.

Competitive Industry

An industry characterized by many firms, free entry and exit, and a product for which every seller is a price taker.