Collegiate Tuxedo Rents Apparel Throughout the Year

question 34

Multiple Choice

Collegiate Tuxedo rents apparel throughout the year. They have experienced non-payment by about 15% of their customers with an average loss of $200. Collegiate wants to stem their losses by using an instant electronic credit check on the customer. These checks will cost them $7 on each of the 1,000 customers. The opportunity cost is 1.5% for the credit period. Should they pursue the credit check?

• A) No, because the $7000 cost is too high.
• B) No, because a $200 loss is minor.
• C) Yes, because the net gain is $30,000.
• D) Yes, because the net gain is $23,000.
• E) Yes, because the net gain is $193,000.

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Definitions:

Influence Tactics

Strategies or methods used by individuals or groups to alter the behavior, attitudes, or opinions of others in a desired direction.

Self-Efficacy

An individual's belief in their capacity to execute behaviors necessary to produce specific performance attainments.

Empowered

Given the authority or power to do something or make decisions; feeling self-empowered or confident in one's abilities.

Ingratiation

A psychological technique involving the use of deliberate flattery or friendliness by someone seeking to gain favor or approval from others.