A Computer Store Regularly Advertises a Very Low Price for a Well-Known

question 142

Multiple Choice

A computer store regularly advertises a very low price for a well-known brand of disks. When the customers come in, however, the salespeople point out the disadvantages of this particular brand and try to persuade them to buy other disks at much higher prices. This retailer is using:

• A) bait pricing.
• B) odd-even pricing.
• C) psychological pricing.
• D) leader pricing.
• E) price lining.

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Definitions:

Constant Rate

A uniform pace or level that does not change over a given time period.

Double-Declining-Balance

The Double-Declining-Balance method is an accelerated depreciation technique which doubles the rate of straight-line depreciation, emphasizing higher depreciation costs in the early years of an asset's life.

Residual Value

The projected sale price of an asset at the termination of its operational life.

Depreciation Expense

Apportioning the expense of a concrete asset across its serviceable life.