Exam 16: Pricing and Credit Decisions

Match the term with its definition. -A technique that sets lower than normal prices to hasten market acceptance of a product or service or to increase market share

Tick Tock, a small retailer of a quality alarm clock, sells its product based on a 35 percent markup of cost. If the firm's product costs are approximately $133, what is the selling price?

The best pricing practice is to undercut competitors' prices.

Match the term with its definition. -A technique that places different prices on a range of products or services to reflect the benefits to the customer of parts of the range

A business will not be successful unless it charges a price for its products that covers its total

A comprehensive break-even analysis entails

Trade credit is extended to consumers purchasing large volumes of products.

Which of the following options is designed for long-term consumer credit?

Buying on credit _____ the amount of working capital needed by the business doing the buying.

If demand for a product is elastic, a change in price will have little effect on total revenues.

List and briefly describe the types of credit.

Break-even analysis is an accurate tool for pricing because it points directly to the correct price for a given product.

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

A firm sells trekking poles at a selling price of $130 per pair. Variable cost per set is $70, and fixed costs are $100,000. What would be the break-even point in units?

A variable pricing strategy occurs where a business sets and advertises a fixed price but gives a discount for various reasons, such as the customer's amount purchased.

The aging schedule is a categorization of accounts receivable based on the length of time they have been outstanding.

Retro Hits, a local band covering songs from the 1980s and 1990s, decided they wanted to expand to more college students. Research showed students thought the current $25 ticket price was too high for a local band. To strengthen ticket demand, Retro Hits began offering $15 tickets to all fans who checked in on Facebook. The band was using a

List the five factors that entrepreneurs need to consider with deciding to extend credit.

Match the term with its definition. -Demand that changes significantly when there is a change in the price of a product or service

Guy owns a lumber yard, working directly with homebuilders and contractors. Margie, a contractor new to the area, wants to set up a credit account with the lumber yard. She has a good history of successful and profitable projects. What questions should Guy ask in evaluating the Margie's credit status?