In 1989,Sears and Roebuck closed its stores and remarked every price in its stores to reflect a new "lower everyday" pricing strategy.Sears must have believed at that time that
A)the profit from extra sales were less than additional menu costs.
B)the menu costs were less than the gain in profits from additional sales.
C)extra liquidity was more important than menu costs.
D)B and C.

Question

Quizplus · Accepted Answer

Sears must have believed that the menu costs (costs associated with changing and communicating the new prices) were less than the gain in profits from additional sales. This is because a "lower everyday" pricing strategy would attract more price-sensitive customers and increase sales volume, which would lead to higher profits in the long run. However, implementing such a strategy requires significant menu costs such as re-pricing merchandise, communicating new prices to customers, and retraining employees on new pricing policies. Sears must have determined that the increase in profits from this strategy would outweigh the menu costs associated with implementing it.

In 1989,Sears and Roebuck Closed Its Stores and Remarked Every