Which term describes a reduction in price?

• A. Selling price
• B. Discount
• C. Interest
• D. Tax

Answer: (B)

A discount is a reduction in price. It can be shown as a percentage off or as a fixed dollar amount subtracted from the original price, making the item cheaper for shoppers. For example, if an item costs $50 and has a 20% discount, the discount would be $10, so you’d pay $40 before any taxes. The selling price is the amount you actually pay to buy the item, which often equals the discounted price before tax. Interest is the extra cost you pay for borrowing money, and tax is the additional charge added by the government on the purchase.