If a Business Decides to Reduce Its Prices Once in a While

question 175

Multiple Choice

If a business decides to reduce its prices once in a while on an unsystematic basis, it is using

• A) price reduction planning.
• B) random discounting.
• C) bait pricing.
• D) periodic discounting.
• E) penetration pricing.

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Definitions:

Discount

A reduction applied to the normal cost of goods or services, or in finance, the process of determining the present value of future cash flows by applying a discount rate.

Compound Interest

Interest that accrues on the principal amount as well as on the accrued interest from earlier periods, for either a deposit or a loan.

Simple Interest Rate

The percentage of interest paid on the original principal amount of a loan or investment, not compounding over time.

Compound Interest

Interest on both the initial principal and the accumulated interest from previous periods on a deposit or loan.