To win a contract to supply the United Kingdom with AWACS military aircraft, Boeing agreed to purchase products from the United Kingdom whose value was equivalent to 130% of the contract. This type of pricing arrangement, which is common when the customer is a foreign government and the product has military applications, is known as:
A)barter.
B)switch trading.
C)compensation trading.
D)offset.
E)dumping.

Question

Quizplus · Accepted Answer

An offset is a pricing arrangement where a seller agrees to purchase goods or services from the buyer's country as a condition of the sale. This is common when the buyer is a foreign government, and the product has military applications. In this case, Boeing agreed to purchase UK products worth 130% of the contract value to win the AWACS military aircraft supply contract, which is an example of an offset arrangement. Therefore, option D is the correct answer.

To Win a Contract to Supply the United Kingdom with AWACS