Exam 10: Pricing: Understanding and Capturing Customer Value

A company must pay each month's bills for rent, heat, interest, and executive salaries regardless of the company's level of output. This exemplifies its ________ costs.

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Question 1

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What is a demand curve? Explain its importance in the context of pricing decisions.

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Question 2

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A demand curve shows the number of units the market will buy in a given time period, at different prices that might be charged. Each price the company might charge will lead to a different level of demand. The relationship between the price charged and the resulting demand level is shown in the demand curve. In the normal case, demand and price are inversely related-that is, the higher the price, the lower the demand. Thus, the company would sell less if it raised its price from P1 to P2. In short, consumers with limited budgets probably will buy less of something if its price is too high. Understanding a brand's price-demand curve is crucial to good pricing decisions. Most companies try to measure their demand curves by estimating demand at different prices. The type of market makes a difference. In a monopoly, the demand curve shows the total market demand resulting from different prices. If the company faces competition, its demand at different prices will depend on whether competitors' prices stay constant or change with the company's own prices.

A cell phone manufacturing firm produced 1,000 cell phones a day but believed that it could reasonably step up production to 2,000 cell phones a day. Consequently, it built a larger plant and installed efficient machinery and work arrangements to realize the projected output. Which of the following can most likely be inferred from this information?

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Question 3

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Lawyers, accountants, and other professionals typically price by adding a standard markup for profit. This exemplifies ________.

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Question 4

Explain the significance of a downward-sloping experience curve.

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Question 5

Which of the following is most likely a fixed cost?

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Question 6

Companies using target costing ________.

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Question 7

Azure Air, an airline company, offers attractive prices to customers with tighter budgets. A no-frills airline, it charges for all other additional services, such as baggage handling and in-flight refreshments. Which of the following best describes Azure Air's pricing method?

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Question 8

Distinguish between value-based pricing and cost-based pricing.

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Question 9

A break-even chart shows the total cost and total revenue expected at various sales volume levels.

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Question 10

In which situation is the market dominated by one seller?

(Multiple Choice)

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Question 11

The total production costs at Kellner Machine Works are $87,000 out of which $45,000 represent fixed costs. Which of the following is representative of the variable costs incurred by the company?

(Multiple Choice)

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Question 12

A restaurant wants to use value-based pricing. It knows the costs of the ingredients in the food. It must also factor in ________ in determining customer satisfaction and value.

(Multiple Choice)

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Question 13

________ refers to the amount of money charged for a product or service.

(Multiple Choice)

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Question 14

Bruno Servers has decided to decrease its prices on its popular higher-range servers. The company can reasonably expect ________ to increase.

(Multiple Choice)

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Question 15

A pharmaceutical company in Utah recently released a new and expensive anti-ulcer drug in the market. The company justifies the high price of the drug by claiming that it is highly effective for treating all kinds of ulcers. The company also claims that the new drug will help bring down the need for invasive surgeries, an additional benefit for patients. Which of the following pricing strategies is the pharmaceutical company most likely using in this instance?

(Multiple Choice)

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Question 16

The perceived value of different product offers can be reasonably assessed by ________.

(Multiple Choice)

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Question 17

Departments or managers that have an influence on pricing include sales managers, finance managers, accountants, and ________.

(Multiple Choice)

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Question 18

Which of the following is most likely a risk associated with experience-curve pricing?

(Multiple Choice)

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Question 19

Factors a company considers in setting its price include all of the following EXCEPT ________.

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Question 20

Showing 1 - 20 of 162

A company must pay each month's bills for rent, heat, interest, and executive salaries regardless of the company's level of output. This exemplifies its ________ costs.

What is a demand curve? Explain its importance in the context of pricing decisions.

Lawyers, accountants, and other professionals typically price by adding a standard markup for profit. This exemplifies ________.

Explain the significance of a downward-sloping experience curve.

Which of the following is most likely a fixed cost?

Companies using target costing ________.

Azure Air, an airline company, offers attractive prices to customers with tighter budgets. A no-frills airline, it charges for all other additional services, such as baggage handling and in-flight refreshments. Which of the following best describes Azure Air's pricing method?

Distinguish between value-based pricing and cost-based pricing.

A break-even chart shows the total cost and total revenue expected at various sales volume levels.

In which situation is the market dominated by one seller?

The total production costs at Kellner Machine Works are $87,000 out of which $45,000 represent fixed costs. Which of the following is representative of the variable costs incurred by the company?

A restaurant wants to use value-based pricing. It knows the costs of the ingredients in the food. It must also factor in ________ in determining customer satisfaction and value.

________ refers to the amount of money charged for a product or service.

Bruno Servers has decided to decrease its prices on its popular higher-range servers. The company can reasonably expect ________ to increase.

The perceived value of different product offers can be reasonably assessed by ________.

Departments or managers that have an influence on pricing include sales managers, finance managers, accountants, and ________.

Which of the following is most likely a risk associated with experience-curve pricing?

Factors a company considers in setting its price include all of the following EXCEPT ________.

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