Statement & Assumption — A telephone company notifies: “Those who do not pay by the due date will be charged a penalty for each day of default.” Which assumptions are implicit? I. A majority may pay by the due date to avoid the penalty. II. Penalty collections may offset losses from delayed payments. III. People generally pay on time and do not need such notices.

Introduction / Context:
The notice imposes a per-day penalty for late bill payment. We determine which background beliefs this policy presumes.

Given Data / Assumptions:

• Policy goal: improve on-time payments and recover carrying costs.

Concept / Approach:
Assumption I is implicit: deterrence works only if many customers change behavior to avoid the penalty. Assumption II is also implicit: penalties help compensate for costs of delayed receipts. Assumption III contradicts the need for a notice; if “people generally pay and do not need such notices,” a deterrent notice would be unnecessary.

Step-by-Step Solution:
Accept I and II; reject III.

Final Answer:
Both I and II are implicit