If 20% of the Customers Pay on Day 10 and 80

question 8

Multiple Choice

If 20% of the customers pay on day 10 and 80% pay on day 30,the average collection period is:

• A) 20 days.
• B) 22 days.
• C) 26 days.
• D) 30 days.
• E) None of these.

---

Definitions:

Lerner Indices

Measures of a firm’s market power based on the difference between price and marginal cost, normalized by the product's price.

Marginal Cost

The increase or decrease in the total cost incurred by producing one more unit of a good or service.

Lerner Index

A measure of a firm's market power, calculated as the difference between price and marginal cost, normalized by price.

Barrier to Entry

Factors that make it difficult for new firms to enter a market, which can include high startup costs, access to technology, and strict regulations.