Question

Laura Spangler, of North Central Novelties, reduces the price of games sold to Robertson's Entertainment by 10 percent to allow for expenses associated with Robertson's promoting the games to consumers. This is an example of a ___________ discount.

Answer 1

Laura Spangler's reduction of the game prices for Robertson's Entertainment by 10 percent is an example of a trade discount, which supports the retailer's promotional activities.

Step-by-step explanation:

Laura Spangler, of North Central Novelties, providing a price reduction of 10 percent to Robertson's Entertainment is an example of a trade discount. A trade discount is given by wholesalers or manufacturers to retailers for various purposes, such as to support the retailer's efforts in advertising or promoting the seller’s products. The purpose of this discount is to cover expenses associated with Robertson's promotion of the games, which in turn could increase sales for both parties.

In economics, when a shopper acquires a product for less than the usual price or believes they have received great value, we refer to this situation as getting a good deal. This can be due to a number of market factors such as increased competition, supply and demand dynamics, or promotional strategies like the trade discount applied by Laura Spangler.