189) A reduction from the list price that a seller gives a buyer as a reward for some activity of
the buyer that is favorable to the seller is called
A) the pretax price.
B) the list price.
C) the manufacturer’s suggested retail price (MSRP).
D) a discount.
E) a trade-in allowance.
190) The four types of discounts are
A) quantity, trade-in, promotional, and cash.
B) quantity, seasonal, trade (functional), and cash.
C) quantity, seasonal, promotional, and FOB.
D) cash, trade (functional), seasonal, and promotional.
E) trade-in, promotional, geographic, and functional.
191) Reductions in unit costs for a larger order are referred to as
A) promotional allowances.
B) economic order discounts.
C) penetration pricing.
D) quantity discounts.
E) case allowances.
192) Quantity discounts are
A) price reductions in unit costs for placing a larger order.
B) price reductions for placing long-term pre-scheduled orders.
C) price reductions to encourage retailers to stock inventory earlier than their normal demand
would require.
D) BOGOs.
E) reductions in unit costs for taking merchandise that will soon be replaced by new and
improved versions of the original product.
193) Your local instant photocopying service charges 10 cents a copy up to 25 copies, 9 cents a
copy for 26 to 99 copies, and 8 cents a copy for 100 copies or more. What kind of adjustment to
its list or quoted price of 10 cents per copy is the photocopying service using?
A) experience curve pricing
B) loss-leader pricing
C) a quantity discount
D) a promotional discount
E) everyday low pricing
194) Mike Morgan, a sales representative for a major food service distributor of Betty Crocker’s
Warm Delights, wanted to encourage larger purchases by his grocery customers. Morgan offered
a 10 percent discount for buying 1 to 49 cases of Warm Delights within a calendar month, 12
percent for 50 to 99 cases, and 15 percent for 100 or more cases. What type of discount was
Morgan offering his customers?
A) a seasonal discount
B) a quantity discount
C) a cash discount
D) a trade discount
E) a case allowance discount
195) A discount that is based on the size of an individual purchase order rather than a series of
repeat orders is referred to as
A) a cumulative quantity discount.
B) bundle pricing.
C) an economic order discount.
D) a noncumulative quantity discount.
E) a promotional allowance.
196) Noncumulative quantity discounts are
A) discounts that are based on a series of orders rather than on the size of an individual order.
B) onetime discounts per customer or household.
C) onetime discounts that must be used within a certain time frame or they will become null and
void.
D) discounts used to place new products on supermarket shelves.
E) discounts that are based on the size of an individual purchase order rather than a series of
orders.
197) Which of the following statements regarding quantity discounts is most accurate?
A) Noncumulative quantity discounts encourage large individual purchase orders, not a series of
orders.
B) Noncumulative quantity discounts encourage repeat buying by a single customer to a far
greater degree than do cumulative quantity discounts.
C) Quantity discounts are primarily used to undercut competitors’ prices.
D) Noncumulative quantity discounts encourage smaller long-term repeat purchases rather than
less frequent larger short-term purchases.
E) Quantity discounts can basically be used only once with each reseller or the price will
increase.
198) Discounts that are designed to encourage repeat buying by a single customer over a given
time period, such as a year, are referred to as
A) promotional allowances.
B) cumulative quantity discounts.
C) cash discounts.
D) functional discounts.
E) noncumulative quantity discounts.
199) Cumulative quantity discounts are
A) reductions in unit costs for a larger order.
B) cumulative cash payments or extra amounts of “free goods” awarded sellers in the channel of
distribution for undertaking certain advertising or selling activities to promote a product.
C) discounts offered to sellers for first-time purchases of a new product as incentives for
providing shelf space.
D) an accumulation of discounts for every additional rebuy in which the discount becomes
incrementally higher.
E) discounts that apply to the accumulation of purchases of a product over a given time period,
typically a year.
200) Which of the following statements regarding quantity discounts is most accurate?
A) Cumulative quantity discounts encourage repeat buying by a single customer to a far greater
degree than do noncumulative quantity discounts.
B) Noncumulative quantity discounts encourage repeat buying by a single customer to a far
greater degree than do cumulative quantity discounts.
C) Quantity discounts are primarily used to undercut competitors’ prices.
D) Noncumulative quantity discounts encourage smaller long-term repeat purchases rather than
less frequent large quantity purchases.
E) Quantity discounts are designed to reward wholesalers and retailers for marketing functions
they will perform in the future.
201) Manufacturers use seasonal discounts to
A) get rid of expired merchandise.
B) prevent retailers from purchasing competitors’ products.
C) extend the peak seasonal selling season.
D) encourage buyers to stock inventory earlier than their normal demand would require.
E) temporarily spur primary demand during periods of soft sales, such as the beginning of a
month, after which prices will return to normal when selective demand picks up.
202) Seasonal discounts are used by manufacturers to
A) get rid of dated merchandise.
B) prevent retailers from purchasing competitors’ products.
C) prolong the peak seasonal selling season.
D) establish an immediate feeling of goodwill between the buyer and seller that hopefully will
continue when prices return to normal.
E) entice dealers to purchase seasonal merchandise earlier in the selling season.
203) To encourage buyers to stock inventory earlier than their normal demand would require,
manufacturers often use
A) noncumulative discounts.
B) cumulative discounts.
C) seasonal discounts.
D) trade discounts.
E) functional discounts.
204) To reward wholesalers and retailers for the risk they accept in assuming increased inventory
carrying costs, manufacturers offer
A) noncumulative discounts.
B) cumulative discounts.
C) trade discounts.
D) seasonal discounts.
E) functional discounts.
205) What type of discount would Toro, a domestic yard machinery company, most likely offer
its channel members to carry and sell its riding lawn mowers during the winter?
A) noncumulative discounts
B) cumulative discounts
C) functional discounts
D) seasonal discounts
E) trade discounts
206) To reward wholesalers and retailers for marketing functions they will perform in the future,
a manufacturer often gives ________ discounts.
A) seasonal
B) cash
C) trade
D) quantity
E) cumulative
207) What type of discount to resellers is based in part on where they are in the channel?
A) seasonal discounts
B) trade discounts
C) cash discounts
D) promotional allowances
E) trade-in allowances
208) Trade discounts are offered to resellers in the marketing channel on the basis of where they
are in the channel and
A) the size of the order.
B) the frequency of the order.
C) when orders are placed during the year.
D) the length of the relationship with the manufacturer.
E) the marketing activities they are expected to perform in the future.
209) Trade discounts are offered to resellers in the marketing channel on the basis of the
marketing activities they are expected to perform in the future and
A) the frequency of the order.
B) where they are in the channel.
C) when orders are placed during the year.
D) the length of the relationship with the manufacturer.
E) the size of the order.
210) Suppose a manufacturer quotes price in the following form: List price—$100 less 30/10/5.
When calculating this trade discount, the first number “30” in the percentage sequence always
refers to the
A) discount to the ultimate consumer.
B) manufacturer’s cost.
C) retail end of the channel.
D) channel intermediary closest to the manufacturer.
E) original unit cost.
211) If the terms of the trade discount are listed as “20/10/5,” the number “20” represents
A) 20 percent of the suggested retail price that is available to the retailer to cover costs and
provide a profit.
B) 20 percent of the suggested wholesale price that is available to the wholesaler to cover costs
and provide a profit.
C) 20 percent of the suggested retail price that is available to the jobber to cover costs and
provide a profit.
D) 20 percent of the manufacturer’s suggested retail price that is available to the ultimate
consumer.
E) 20 percent of the suggested retail price that is the profit margin to the manufacturer.
212) If the terms of the trade discount are listed 20/10/5, the number “5” represents
A) 5 percent of the suggested retail price that is available to the retailer to cover costs and
provide a profit.
B) 5 percent of the suggested retail price that is available to the consumer as a rebate after
purchase.
C) 5 percent of the suggested retail price that is available to the wholesaler or jobber to cover
costs and provide a profit.
D) 5 percent of the suggested retail price that is available to the ultimate consumer if purchasing
restrictions are met.
E) 5 percent of the suggested retail price that is the profit margin to the manufacturer.
213) A manufacturer does marketing research and estimates that consumers will accept a
manufacturer’s suggested retail price of $50 for a jacket. The manufacturer expects to offer trade
discount terms of 40/10/5 to retailers, wholesalers, and agents in its marketing channel. What
price will the manufacturer receive for the jacket?
A) $47.50
B) $45.00
C) $30.00
D) $27.50
E) $25.65
214) A manufacturer estimates that consumers will accept a price of $275 for a snowboard. If the
manufacturer expects to offer trade discounts of 35/15/5 to retailers, wholesalers, and jobbers,
respectively, what price will the manufacturer receive for the snowboard?
A) $275.00
B) $178.75
C) $151.94
D) $144.34
E) $100.00
215) A manufacturer offers a suggested list price for a cashmere sweater of $250. The trade
discount is 40/20/10. What amount does the manufacturer expect to receive for the sweater?
A) $175.00
B) $225.00
C) $108.00
D) $125.00
E) $100.00
216) Within the channel of distribution for certain types of imported furniture, the typical trade
terms are 40/15/10. If a dining room table has a list price of $1,000, how much would the
manufacturer sell the table to a jobber for?
A) $1,000
B) $600
C) $510
D) $459
E) $400
217) A glassblowing studio makes fine pieces of art glass. It has decided on a retail list price of
$2,000 for one of its vases. They sell only through wholesalers and retailers who receive 50/10
terms. How much will the studio receive from selling this vase?
A) $2,000
B) $1,000
C) $900
D) $800
E) $100
218) To encourage retailers to pay their bills quickly, manufacturers offer them
A) quantity discounts.
B) cash discounts.
C) flexible pricing policies.
D) promotional allowances.
E) manufacturer’s inducements.
219) The purpose of a cash discount is to
A) reward retailers for making large quantity purchases.
B) encourage purchasing items during periods of low demand.
C) prevent competitors from obtaining shelf space.
D) counteract the introduction of a new product by a competitor.
E) encourage retailers to pay their bills promptly.
220) If the cash discount terms for a $500 purchase are 4/10 net 30, the number 4 refers to
A) the percentage markup on the product.
B) the percentage discount if the bill is paid within 10 days.
C) the percentage increase in price if the bill is not paid within 10 days.
D) the discount in dollars per unit if the order is paid on time within 30 days.
E) the penalty in dollars if the bill is not paid within 10 days.
221) If the cash discount terms for a $500 purchase are 4/10 net 30, the number 10 refers to
A) the percentage discounted if the bill is paid within 30 days.
B) the percentage increase in price if the bill is not paid within 10 days.
C) the number of days for which the discount is valid.
D) the discount in dollars per unit if the order is paid on time within 30 days.
E) the penalty in dollars if the bill is not paid within 10 days.
222) A construction company was offered a 3 percent reduction in price off all invoices from a
lumberyard for paying within 10 days of issue. The lumberyard was offering a
A) trade discount.
B) cash discount.
C) promotional allowance.
D) rebate.
E) flexible price.
223) Larry’s Lawn Care allows customers to use a credit card for purchases. Larry pays 4 percent
of the sale to the credit card company. To promote more business, Larry decides to offer a lower
price to customers paying cash—that price being 3 percent less than the standard list price. Larry
is giving his customers a(n)
A) functional discount.
B) trade-in allowance.
C) promotional allowance.
D) cash discount.
E) everyday low price.
224) When Sherman bought gas, he noticed the convenience store offered him a 2 percent
reduction in price if he paid cash rather than if he used his credit card to pay for his purchase.
The convenience store was offering him a
A) trade discount.
B) cash discount.
C) promotional allowance.
D) rebate.
E) functional discount.
225) Allowances, like discounts, are
A) rewards given to retailers to encourage early payment.
B) payment extensions given to cash-strapped consumers during the current recession.
C) list price deductions based on surges in consumer demand.
D) list price deductions based on sudden drops in consumer demand.
E) reductions from list or quoted prices to buyers for performing some activity.