A Firm Has Just Received an Invoice for $1,000 with the Following

question 159

Multiple Choice

A firm has just received an invoice for $1,000 with the following terms: 3/10, net 30. In this case, the firm:

• A) should not worry about earning the cash discount because the amount is small.
• B) can take a 10 percent discount if it pays within 3 days, and otherwise the full amount is due in 30 days.
• C) can take a 3 percent discount if it pays the invoice on the 30th day.
• D) in effect, will be borrowing at an annual rate of 54 percent if it pays the invoice in 30 days.
• E) should pay $900 if it pays within 10 days.

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Definitions:

Health Insurance

Health insurance is a type of insurance coverage that pays for medical and surgical expenses incurred by the insured, often including benefits for preventive care and health-related services.

Efficiency Loss

The loss of economic efficiency that occurs when the optimal allocation of resources is not achieved, often due to market failures or externalities.

Health Insurance

An insurance policy that covers or reimburses the policyholder for their medical and surgical costs resulting from sickness or injury.

Efficiency Loss

The economic cost arising when market transactions do not allocate resources in the most beneficial way for society, often manifesting in deadweight loss.