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In 1999, America Mart, which previously only sold through retail outlets, began selling on the internet while keeping its retail stores open. Total sales increased in 1999, but profits were less than in 1998.
Which of the following, if true, contributes most to explaining why America Mart's profits were more in 1998 than in 1999?
A. There was a two percent increase in sales tax in 1999 that consumers had to pay on all retail purchases.
B. A greater number of promotions for their internet site were made available to previous customers than to people who had never shopped at America Mart before.
C. In 1999, America Mart's wholesale purchase costs increased by a smaller amount than the selling price of goods on their internet site.
D. Customers who had never previously purchased products from America Mart purchased, on average, fewer products in 1999 than previous customers did.
E. The increase in costs due to setting up the web site in 1999 was greater than the increase in revenue from sales in 1999.
Which of the following, if true, contributes most to explaining why America Mart's profits were more in 1998 than in 1999?
A. There was a two percent increase in sales tax in 1999 that consumers had to pay on all retail purchases.
B. A greater number of promotions for their internet site were made available to previous customers than to people who had never shopped at America Mart before.
C. In 1999, America Mart's wholesale purchase costs increased by a smaller amount than the selling price of goods on their internet site.
D. Customers who had never previously purchased products from America Mart purchased, on average, fewer products in 1999 than previous customers did.
E. The increase in costs due to setting up the web site in 1999 was greater than the increase in revenue from sales in 1999.
26 Apr 2022, 10:22
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In 1999, America Mart, which previously only sold through retail outlets, began selling on the internet while keeping its retail stores open. Total sales increased in 1999, but profits were less than in 1998.
Which of the following, if true, contributes most to explaining why America Mart's profits were more in 1998 than in 1999?
A. There was a two percent increase in sales tax in 1999 that consumers had to pay on all retail purchases. -
Incorrect. The increase in costs of the consumers has no bearing on why the profits of the company decreased.
B. A greater number of promotions for their internet site were made available to previous customers than to people who had never shopped at America Mart before.
- Incorrect. How was the cost affected is not mentioned.
C. In 1999, America Mart's wholesale purchase costs increased by a smaller amount than the selling price of goods on their internet site.
- Incorrect. Only the cost and selling price aspect of the website is mentioned, but what about retail stores? This option is a distortion.
D. Customers who had never previously purchased products from America Mart purchased, on average, fewer products in 1999 than previous customers did.
- Incorrect. Out of scope.
E. The increase in costs due to setting up the web site in 1999 was greater than the increase in revenue from sales in 1999.
- Correct. Change in profit = change in revenue minus change in costs. Here, increase in costs> Increase in revenue, hence profit decrease.
Posted from my mobile device
Which of the following, if true, contributes most to explaining why America Mart's profits were more in 1998 than in 1999?
A. There was a two percent increase in sales tax in 1999 that consumers had to pay on all retail purchases. -
Incorrect. The increase in costs of the consumers has no bearing on why the profits of the company decreased.
B. A greater number of promotions for their internet site were made available to previous customers than to people who had never shopped at America Mart before.
- Incorrect. How was the cost affected is not mentioned.
C. In 1999, America Mart's wholesale purchase costs increased by a smaller amount than the selling price of goods on their internet site.
- Incorrect. Only the cost and selling price aspect of the website is mentioned, but what about retail stores? This option is a distortion.
D. Customers who had never previously purchased products from America Mart purchased, on average, fewer products in 1999 than previous customers did.
- Incorrect. Out of scope.
E. The increase in costs due to setting up the web site in 1999 was greater than the increase in revenue from sales in 1999.
- Correct. Change in profit = change in revenue minus change in costs. Here, increase in costs> Increase in revenue, hence profit decrease.
Posted from my mobile device
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