Exam 13: Building the Price Foundation

Suppose you want to buy a Tesla Model S, an all-electric, zero-emission car that has a 265-mile range and can be recharged in three hours. The Tesla Model S Performance model has a list price of $87,500. However, you want several options (Performance Plus Package, red multicoat armor paint, Tech Package, Sound Studio Package, home charging station, performance wheels, and others) that will cost $17,500. An extended warranty will add an additional $5,000. However, if you put $50,000 down now and finance the balance over the next year, you will receive a dealer rebate of $5,000 off the list price. The dealer will give you a $7,000 trade-in allowance for your 2014 Honda Civic DX four-door sedan. In addition, you will have to pay a state sales tax of $10,000, an auto registration fee of $1,000 to the state, and a $1,000 destination charge to ship and prep the car. But because the Tesla Model S is an alternative energy vehicle, you qualify for a $2,500 state rebate and a $7,500 federal tax credit! Finally, your total finance charge is $7,000. Applying the price equation, what is your final price for the Tesla Model S?

If a McDonald's menu board advertises Mini Meals, a small bundle of items for $3, McDonald's is most likely using which type of pricing strategy?

How do consumers use price in their assessments of value?

The ratio of perceived benefits to price is referred to as

The break-even point (BEP) = [________ ÷ (Unit price − Unit variable cost)].

The particular type of competition dramatically influences the range of price competition and, in turn,

The percentage change in quantity demanded relative to the percentage change in price is referred to as

Wilkinson Sword exchanged some of its knives for advertising used to promote its razor blades. This is an example of

What factors determine price elasticity of demand?

Suppose you are the owner of a picture frame store and you wish to calculate how many pictures you must sell to cover your fixed and variable costs at a given price. Demand for pictures is strong, so the average price customers are willing to pay for each picture frame is $120. Also, suppose your fixed costs (FC) total $32,000 (real estate taxes, interest on a bank loan, etc.) and unit variable cost (UVC) for a picture frame is $40 (labor, glass, frame, and matting). What is the quantity of picture frames you will need to sell to break even?

Figure 13-4B -Which of these would most likely account for the shift in the demand curve from D2to D3shown in Figure 13-4B above?

All of these are examples of pricing objectives exceptwhich?

Pure monopoly is the competitive market situation where

SHAPE magazine is targeted at young women seeking healthier lifestyles. At a price of $3 per copy, 1.25 million copies are sold. If the price per issue is increased to $3.25, only 1 million copies would be sold. Fixed costs are $1 million and unit variable costs are $0.50 per magazine. From the information provided here, what is SHAPE magazine's total revenue obtained at the lower $3 price?

When Pizza Hut announced it was going to add 25 percent more toppings to its Meat Lover's line of pizzas without increasing prices, consumers benefited from an increase in what?

Elastic demand exists when

Figure 13-7B -In the break-even chart in Figure 13-7 above, the triangular area FBE represents the firm's

Value pricing is

Mrs. Renfro's, Inc., sells 25 different relishes in 45 states. Mrs. Renfro's chipotle corn salsa is so popular that the company cannot make enough to keep its resellers stocked. Its price of $4.50 for a jar seems just right to consumers who savor its hot and spicy taste. The popularity of hot and spicy food is an example of a ________ that Mrs. Renfro's has taken advantage of to make its product a success.

Which of these is true about a pair of $200 designer denim jeans?