The "80/20 rule" says that:
A) only 20 out of every 100 firms use formal accounting controls.
B) a firm should hire 20 sales reps for every 80 customers.
C) marketing accounts for 80 percent of a typical consumer's dollar.
D) even though a firm is showing a profit, 80 percent of its business might be coming from only 20 percent of its customers.
E) usually about 20 percent of a firm's customers are unprofitable.

Question

Quizplus · Accepted Answer

The "80/20 rule" also known as the Pareto principle states that 80 percent of an outcome results from 20 percent of its inputs or causes. In business, it means that 80 percent of a company's revenue comes from 20 percent of its customers. This means that even though a firm is profitable, it might be heavily reliant on a small group of customers.

The "80/20 Rule" Says That