Chapter 12: A. Discussion Questions: 7, 11, and 13.
7. Quantity discounts are not a form of price discrimination because the firm saves on handling large orders. True or False? Explain
True, quantity discounts are not a form of price discrimination because the firm saves on handling large orders (Salvatore, 2012, p. 492). Large orders can be shipped at a lesser price compared to smaller orders, saving on shipping cost. There are many companies that reduce the price of the product if the company buys in ...view middle of the document...
502). (B) In addition, if the external market for the intermediate product exist, the amount produced by production does not have to be the same as the amount produced of the ending product. (C) Furthermore, an imperfectly competitive external market for the intermediate product exists, the transfer price of the intermediate product for intrafirm sales will be different from the cost of the intermediate product on the imperfectly competitive external market.
13. What are ( a) the advantages and Pg 509,510, ( b) the disadvantages of cost- plus pricing? Pg 509,510, ( c) Why is incremental cost pricing the correct pricing method? Page 511,512, 513 . Why is full- cost pricing equal to it?page 509,