Freight absorption pricing:
A) amounts to cutting list price to appeal to new geographic markets.
B) forces all buyers to pay higher shipping costs.
C) tends to restrict firms from competing in distant markets.
D) tends to decrease competition.
E) None of these alternatives is correct.

Question

Quizplus · Accepted Answer

Freight absorption pricing involves a seller absorbing shipping costs rather than passing them on to the buyer, often to penetrate new geographic markets or compete more effectively by not adding transportation costs to the sale price. This strategy can make products more appealing in new areas by effectively reducing the overall cost to the buyer.

Freight Absorption Pricing