When using odd pricing, firms should recognize that
A) small price increases usually have a large positive effect on sales and profits.
B) flexible pricing increases transaction costs.
C) flexible pricing undermines consumer confidence.
D) sales tax may undermine the effectiveness of this practice.

Question

Quizplus · Accepted Answer

Sales tax can alter the final price that consumers pay, making it no longer appear as an "odd price" (e.g., $9.99 becoming $10.07), which can undermine the psychological effect of odd pricing strategies intended to make prices seem lower.

When Using Odd Pricing, Firms Should Recognize That