You Are Considering Setting Up a Booth at a Street

question 255

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:

Positive Punishment

A behavioral strategy that involves the addition of an unfavorable outcome in response to an undesired behavior.

Discipline

The practice of training people to obey rules or a code of behavior, using punishment to correct disobedience.

Added

Refers to something that has been included or joined to another thing, increasing the total number, quantity, or extent.

Observational Learning

The process of learning behaviors by watching and imitating others.