Exam 10: Pricing: Understanding and Capturing Customer Value

________ involves setting prices based on the costs for producing, distributing, and selling the product plus a fair rate of return for effort and risk.

Why is markup pricing most likely impractical?

Price is the most inflexible of the marketing mix elements.

With accumulated production experience and a higher volume of production, companies not only become more efficient but also ________.

If demand changes greatly with price, the demand is inelastic.

Price is important to managers ________.

In 2011, the fixed costs of a company were $500,000, and its variable costs equaled $150,000. In 2010, the company made an annual profit of $200,000. It has been predicted that, despite a steady growth, the company's variable costs will likely equal $300,000 by 2013. The total costs of the company in 2011 were ________.

List some important characteristics of price.

Costs that change with the level of production are referred to as ________.

Which of the following exemplifies a pure competitive market?

In Viña del Mar, Chile, a large number of shops specialize in selling the same quality of seafood products along the beach frequented by tourists. No individual shop dares charge more than the going price without fearing loss of business to other shops. This exemplifies ________.

The long-run average cost (LRAC) curve indicates the ________.

What is a pure monopoly?

Which of the following involves setting prices based on a rival firm's strategies, costs, prices, and market offerings?

Explain break-even pricing.

Which of the following is true with regard to monopolistic competition?

Explain the concept of the price floor.

Herbie Inc., a firm manufacturing sandwich makers, has fixed costs of $250,000, variable costs of $20 per unit of output, and expected unit sales of 50,000 units. What is the unit cost of a sandwich maker manufactured by Herbie?

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?

Bon Vivant offers an assortment of exclusive French wines at incredibly low prices. These prices are neither limited-time offers nor special discounts, but represent the daily prices of products sold by Bon Vivant. This reflects Bon Vivant's ________ pricing strategy.