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It Is a Conventional Practice Among Apparel Retailers to Set

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Essay

It is a conventional practice among apparel retailers to set the retail price of clothing at twice the cost paid to the manufacturer.For example,if the retailer pays $7 for a pair of jeans,the jeans will retail for $14.What must the price elasticity of demand be for this practice to be profit maximizing?


Definitions:

Net Float

The difference between checks written against and deposited in an account, before those checks have been cleared and settled.

Money Market Securities

are short-term financial instruments, such as treasury bills and commercial paper, that provide liquidity and relatively low risk.

Average Daily Receipts

The average amount of cash received by a business on a daily basis, calculated over a specific period of time.

Collection Delay

The lag between the time when a payment is made by a customer and when the funds are actually available for use by the recipient.

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