If Firms Price Their Products Too Low,it May

question 76

Multiple Choice

If firms price their products too low,it may

• A) result in lower costs.
• B) create a premium pricing effect.
• C) increase contribution per unit.
• D) result in inelastic demand.
• E) signal poor quality.

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Definitions:

Cost of Goods Sold

Financial outlays directly incurred during the production of goods a company retails, involving material and labor.

Merchandise

Goods that are bought and sold in the course of business operations, typically in a retail or wholesale context.

Credit Terms

The conditions under which a seller extends credit to a buyer, including the repayment time frame and any interest or discounts.

Trade Discount

A reduction in the listed price of a product or service, offered by a seller to a buyer in the business-to-business market.