Which of the Following Terms Would Tend to Minimize a Firm's

question 109

Multiple Choice

Which of the following terms would tend to minimize a firm's investment in accounts receivable?

• A) net 15
• B) net 30
• C) 1/15 net 45
• D) 2/10 net 30

---

Definitions:

Substitution Effect

The substitution effect occurs when consumers replace more expensive items with less costly alternatives, holding utility constant.

Price

The amount of money required to purchase a good or service, typically determined by supply and demand dynamics in the market.

Claret

A term predominantly used in Britain to refer to red wines from the Bordeaux region of France.

Demand Function

A mathematical representation that describes the relationship between the quantity of a good that consumers are willing and able to purchase and its price.