Freight-absorption pricing is especially useful to a firm that:
A) has high variable costs per unit of product.
B) has excess capacity.
C) wants to avoid head-on competition.
D) has low fixed costs.
E) wants to engage in collusion with other firms.

Question

Quizplus · Accepted Answer

Freight-absorption pricing is especially useful to a firm that has excess capacity. This is because the firm can use the excess capacity to absorb the cost of shipping the product to the customer, which can make the product more attractive to the customer.

Freight-Absorption Pricing Is Especially Useful to a Firm That