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Exam 16: Pricing and Credit Decisions

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Question 1

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Variable pricing strategy occurs where a business sets and advertises a fixed price but gives a discount for reasons such as the customer's knowledge and bargaining strength.

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Contrast penetration price and skimming price strategies.

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Penetration pricing involves pricing pro...

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One of the primary purposes of the federal Consumer Credit Protection Act is to

By allowing credit sales a seller is following a risk-free practice to increase profits.

How much discount will a buyer receive if the buyer pays a trade credit bill of $60,000 with terms of sale of 2/5, net 30 on the net due date?

CarePair, a small business specializing in making and distributing hospital gowns to medical facilities, often sells its product on credit. The company maintains a ledger that divides accounts receivable into age categories based on the length of time they have been outstanding. Receivables 1-6 months old are deemed grade A (regular business) ; 7-12, grade B (overdue business) ; and 13-24, grade C (delinquent business) ; those accounts receivable over 24 months old are turned over to a collection agency. CarePair is relying on ____ to keep track of accounts receivable.

Hollywood Entertainment analyzed its customer base to ascertain the characteristics of customer segments and understand special market conditions. The independent movie theater found that senior citizens thought the current $5 admission price was too high and that most consumers preferred to go to the movies after 6:00 p.m. To strengthen ticket demand, Hollywood Entertainment began offering $3.50 tickets to all seniors and $4 tickets for all movies starting before 6:00 p.m. Hollywood Entertainment was employing a

With a skimming price strategy, prices for products or services are set lower than normal, long-range market prices in order to gain more rapid market acceptance or to increase market share.

An important source of credit information is the customer's previous credit history.

Trade-credit agencies collect credit information on business firms and consumers in a given area.

List and describe the major types of consumer credit.

Nina should use ____ if she must cover operating expenses, subsequent price reductions, and achieve a desired profit level.

Which of the following is a good source of consumer credit information?

A trade credit bill of $80,000 with terms of sale of 2/5, net 30 means the buyer saves ____ if the bill is paid within the discount period.

Will's business will not be successful unless it charges a price for its products that covers its

Markup pricing is a cost-plus method of pricing that arrives at a markup percentage high enough to cover operating expenses, subsequent price reductions, and desired profit levels.

Price lining refers to the systematic determination of the right price for a product or service.

Under certain conditions, pricing at less than total costs makes sense as a long-term strategy.

Sellers using a practice called dynamic pricing set prices based on those of market leaders.

Clock Tickers, a small retailer of a quality alarm clock, sells its product for $180. If Clock Tickers adheres to pricing based on a 35% markup of cost, the firm's product costs are approximately