You Are Considering Setting Up a Booth at a Street

question 306

Multiple Choice

You are considering setting up a booth at a street fair in a town not far from where you are located. Any sale you make will be a one-time sale. There is only a 50 percent chance that you will collect your money on a credit sale. The product you want to sell has a variable cost of $3.90 and a sales price of $5.00. The monthly interest rate is 1.5 percent. Should you offer people 30 days to pay? Why or why not?

• A) Yes; because you will earn $.98 on every credit sale you make.
• B) Yes; because you will earn $1.44 on every credit sale you make.
• C) No; because the net present value of the potential sale is -$1.44.
• D) No; because the net present value of the potential sale is -$.98.
• E) It doesn't matter; because the present value of the potential sale is $0.

---

Definitions:

Awareness Contexts

The varying degrees of understanding or perception a person has about their environment or situation, especially in cognitive and social domains.

Glaser And Strauss

Sociologists who developed the grounded theory methodology, focusing on generating theory from empirical data.

Norm

A plan of action or expected behavior pattern thought to be appropriate for a particular situation.

Kubler-Ross's Stages

A model detailing five stages of grief individuals often experience after loss: denial, anger, bargaining, depression, and acceptance.