Bob’s lawn mowing service is a profit-maximizing, competitive firm. Bob mows lawns for $27.00 each. His total cost each day is $280, of which, $30 is a fixed cost. He mows 10 lawns a day. What can you

1. Yes, Bob's attempts to extend the discount period are unethical. By deducting the discount amount without adhering to the payment terms, Bob is essentially taking advantage of Auto Warehouse's offer and not fulfilling his end of the bargain. 2. Auto Warehouse can implement stricter payment terms, such as offering a smaller discount for payment within 15 days instead of 10, or requiring a deposit upfront. They can also consider not offering discounts to customers who consistently take advantage of payment extensions. 3. Dear Bob's Discount Auto Parts, We appreciate your business and would like to remind you of our cash discount and credit terms. In order to receive the 2% discount, invoices must be paid within 10 days of the invoice date. Please note that post-dating checks does not fulfill the payment terms and you will not be eligible for the discount if the check is not received by the 10th day. Thank you for your understanding and cooperation. 4. Advantages of offering cash discounts include encouraging prompt payment, improving cash flow, and building customer loyalty. Disadvantages include decreased profit margins, potential for abuse by customers, and increased administrative expenses.