If a ________ Change in a Price Produces a ________

question 29

Multiple Choice

If a ________ change in a price produces a ________ change in demand, then demand is said to be elastic.

• A) small; large
• B) small; small
• C) large; small
• D) large; large

Distinguish between the treatment of accounts receivable under the allowance method versus the direct write-off method.

Appreciate the legal and ethical considerations in the management and reporting of receivables.

Identify the implications of using notes receivable and how they differ from accounts receivable.

Understand and explain the concepts of allowance and direct write-off methods for accounting for uncollectible accounts.

---

Definitions:

Promotional Allowances

Cash payments or an extra amount of “free goods” awarded sellers in the marketing channel for undertaking certain advertising or selling activities to promote a product.

Product-line Pricing

A pricing strategy where different products in the same product line are priced differently, often based on features, materials, or product versions.

Cost-plus-percentage

A pricing method where a fixed percentage is added to the total cost of production as the profit margin.

Variable Costs

Costs that change in proportion to the goods or services that a business produces.