Which statement is true about digital products compared to physical goods?

• A. They are never taxed
• B. They do not require physical storage, inventory, or additional employees
• C. They must be delivered physically
• D. They require substantial storage and inventory

Answer: (B)

Digital products differ from physical goods in how they are stored and delivered. The true statement is that they do not require physical storage, inventory, or additional employees, because digital goods are delivered electronically and can be distributed via downloads or online access without warehousing or traditional fulfillment staff. You do still need infrastructure like servers or cloud hosting to deliver them, and there may be support or licensing considerations, but those aren’t the same costs and requirements as maintaining physical inventory. Taxes on digital goods vary by jurisdiction, so they aren’t automatically exempt, and they do not have to be delivered physically.