Answer to Question 1
True
Answer to Question 2
The major types of discounts include: trade, quantity, cash, seasonal discounts, and allowances.
Trade discounts are taken off the list prices and are offered to marketing intermediaries. This is done to attract and keep effective resellers by compensating them for performing certain functions, such as transportation, warehousing, selling, and providing credit.
Quantity discounts are given to customers who buy in large quantities because a seller's per-unit selling cost is usually lower for larger purchases.
A cash discount is an incentive offered for prompt payment. It encourages customers to buy large quantities when making purchases and, in case of cumulative discounts, encourages customer loyalty.
A seasonal discount is a price reduction to buyers who purchase out of season. It helps a seller to maintain steadier production during the year and allows a marketer to use resources more efficiently by stimulating sales during off-peak periods.
An allowance is a reduction in price to achieve a desired goal. Trade-in allowances are price reductions granted for turning in used equipment when purchasing new equipment. Promotional allowances ensure that dealers participate in advertising and sales support programs.
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