If Your Local Gasoline Station Raised Its Price by 20

question 544

Multiple Choice

If your local gasoline station raised its price by 20 percent, its sales of gasoline would decrease substantially because your local gas station

• A)has little or no market power.
• B)is small relative to the size of the gasoline market.
• C)is a competitive firm.
• D)All of the above are correct.

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Definitions:

Gross Price

The total cost of a good or service without deducting any discounts, taxes, or other expenses.

Net Price

The actual price paid for a product after deducting any discounts, rebates, or allowances from the list or gross price.

Allowance Method

An accounting technique that estimates and records bad debts expense from credit sales based on anticipated losses.

Sales Discounts

Reductions in the price of goods or services offered to customers, usually as an incentive to encourage prompt payment.