Question 1

Pricing constraints are

Accepted Answer

A)  barriers that must be overcome in order to set pricing objectives. 
B)  competitive pricing advantages one firm has over another. 
C)  different pricing strategies for each of the firm's products. 
D)  factors that limit the range of prices a firm may set. 
E)  barriers to entry a firm faces when launching a new product. 
A)  barriers that must be overcome in order to set pricing objectives. 
B)  competitive pricing advantages one firm has over another. 
C)  different pricing strategies for each of the firm's products. 
D)  factors that limit the range of prices a firm may set. 
E)  barriers to entry a firm faces when launching a new product.

Question 2

Contribution margin can be expressed on a per unit basis as

Accepted Answer

A)  the sum of the expenses of the firm that are stable and do not change with the quantity of a product that is produced and sold. 
B)  the sum of the expenses of the firm that change with the quantity of a product that is produced and sold. 
C)  the difference between unit selling price and unit variable cost. 
D)  the average amount of money received for selling one unit of a product or simply the price of that unit. 
E)  the change in total cost that results from producing and marketing one additional unit of a product. 
A)  the sum of the expenses of the firm that are stable and do not change with the quantity of a product that is produced and sold. 
B)  the sum of the expenses of the firm that change with the quantity of a product that is produced and sold. 
C)  the difference between unit selling price and unit variable cost. 
D)  the average amount of money received for selling one unit of a product or simply the price of that unit. 
E)  the change in total cost that results from producing and marketing one additional unit of a product.

Question 3

In the process of setting price, a marketer must first identify pricing objectives and constraints. Next, in Step 2, three specific estimates are necessary. What are they?

Accepted Answer

The three key items in Step 2

Question 4

While consumer tastes and price and availability of similar products determine what consumers want to buy, consumer income determines

Accepted Answer

A)  where they buy. 
B)  the degree of brand loyalty. 
C)  the degree of repeat purchase. 
D)  what they can buy. 
E)  their likelihood of spreading positive word-of-mouth. 
A)  where they buy. 
B)  the degree of brand loyalty. 
C)  the degree of repeat purchase. 
D)  what they can buy. 
E)  their likelihood of spreading positive word-of-mouth.

Question 5

Washburn Guitars markets its guitars to four distinct market segments. The firm's mass customization instruments are targeted at

Accepted Answer

A)  first-time buyers. 
B)  professional musicians. 
C)  stars and famous musicians. 
D)  large institutional buyers such as band programs. 
E)  intermediate-skill players who may become professional musicians. 
A)  first-time buyers. 
B)  professional musicians. 
C)  stars and famous musicians. 
D)  large institutional buyers such as band programs. 
E)  intermediate-skill players who may become professional musicians.

Question 6

What are the six major steps involved in setting prices?

Accepted Answer

Step 1: Identify pricing objectives and

Question 7

During the iPad's __________ stage of its product life cycle, Apple had great latitude in setting a price for the product because of a lack of competition.

Accepted Answer

A)  decline 
B)  maturity 
C)  growth 
D)  accelerated development 
E)  introduction 
A)  decline 
B)  maturity 
C)  growth 
D)  accelerated development 
E)  introduction

Question 8

Unit variable cost divided by unit selling price times 100 is the contribution margin expressed

Accepted Answer

A)  as the sum of all units sold. 
B)  on a per unit basis for a product. 
C)  as a percentage. 
D)  as a total of fixed costs. 
E)  as a total of all costs. 
A)  as the sum of all units sold. 
B)  on a per unit basis for a product. 
C)  as a percentage. 
D)  as a total of fixed costs. 
E)  as a total of all costs.

Question 9

Several companies produce latex gloves that are used in a variety of different industries. If one of the glove manufacturers decreases its price by just a few percentage points, it will result in a significant increase in quantity demanded. The demand for latex gloves is

Accepted Answer

A)  synergistic. 
B)  inelastic. 
C)  unitary. 
D)  elastic. 
E)  static. 
A)  synergistic. 
B)  inelastic. 
C)  unitary. 
D)  elastic. 
E)  static.

Question 10

Variable cost is

Accepted Answer

A)  the sum of the expenses of the firm that are stable and do not change with the quantity of a product that is produced and sold. 
B)  the sum of the expenses of the firm that change with the quantity of a product that is produced and sold. 
C)  the total expense incurred by a firm in producing and marketing a product, which equals the sum of fixed cost and marginal cost. 
D)  the average amount of money received for selling one unit of a product or simply the price of that unit. 
E)  the change in total cost that results from producing and marketing one additional unit of a product. 
A)  the sum of the expenses of the firm that are stable and do not change with the quantity of a product that is produced and sold. 
B)  the sum of the expenses of the firm that change with the quantity of a product that is produced and sold. 
C)  the total expense incurred by a firm in producing and marketing a product, which equals the sum of fixed cost and marginal cost. 
D)  the average amount of money received for selling one unit of a product or simply the price of that unit. 
E)  the change in total cost that results from producing and marketing one additional unit of a product.

Question 11

A firm's profit equals

Accepted Answer

A)  Total cost + Total revenue or [(Fixed cost + Variable cost) + (Unit price × Quantity sold)]. 
B)  Total revenue − Total cost or [(Unit price × Quantity sold) − (Fixed cost + Variable cost)]. 
C)  Total cost − Marginal cost or [(Fixed cost + Variable cost) − (Unit price × Quantity sold)]. 
D)  Total cost − Variable cost or [(Fixed cost + Variable cost) − (Unit price × Quantity sold)]. 
E)  Total revenue/Total cost or [(Unit price × Quantity sold) ÷ (Fixed cost + Variable cost)]. 
A)  Total cost + Total revenue or [(Fixed cost + Variable cost) + (Unit price × Quantity sold)]. 
B)  Total revenue − Total cost or [(Unit price × Quantity sold) − (Fixed cost + Variable cost)]. 
C)  Total cost − Marginal cost or [(Fixed cost + Variable cost) − (Unit price × Quantity sold)]. 
D)  Total cost − Variable cost or [(Fixed cost + Variable cost) − (Unit price × Quantity sold)]. 
E)  Total revenue/Total cost or [(Unit price × Quantity sold) ÷ (Fixed cost + Variable cost)].

Question 12

Figure 13-7B
-The break-even chart for a picture frame store in Figure 13-7 above shows that by selling 200 pictures, the store will

Accepted Answer

A)  break even. 
B)  earn a profit. 
C)  incur a loss. 
D)  have no fixed costs. 
E)  have no variable costs. 
A)  break even. 
B)  earn a profit. 
C)  incur a loss. 
D)  have no fixed costs. 
E)  have no variable costs.

Question 13

The competitive market situation in which one seller sets the price for a unique product is referred to as

Accepted Answer

A)  pure monopoly. 
B)  oligopoly. 
C)  monopolistic competition. 
D)  pure competition. 
E)  monopolistic oligopoly. 
A)  pure monopoly. 
B)  oligopoly. 
C)  monopolistic competition. 
D)  pure competition. 
E)  monopolistic oligopoly.

Question 14

Recently, much of the western United States experienced drought conditions and water usage was restricted in Denver. Yet, even though most people used less water, the price of water did not drop. When the drought was declared over, the water company raised water prices. However, the residents of Denver did not use less water. Here, water is

Accepted Answer

A)  price-elastic. 
B)  price-sensitive. 
C)  price-inelastic. 
D)  price-insensitive. 
E)  unitary-elastic. 
A)  price-elastic. 
B)  price-sensitive. 
C)  price-inelastic. 
D)  price-insensitive. 
E)  unitary-elastic.

Question 15

An online movie streaming service charges $14.99 per month for its basic package. However, when a competitor introduced the same service at $13.99, the firm dropped its price to $13.99. The firm most likely made this price reduction in an attempt to

Accepted Answer

A)  decrease revenue but increase profit. 
B)  increase profit by increasing revenue. 
C)  maintain market share. 
D)  decrease market share. 
E)  increase efficiency. 
A)  decrease revenue but increase profit. 
B)  increase profit by increasing revenue. 
C)  maintain market share. 
D)  decrease market share. 
E)  increase efficiency.

Question 16

Which of the following statements regarding a market share pricing objective is most accurate?

Accepted Answer

A)  A market share objective is often difficult for product managers since stockholders are looking for immediate dividends (return of profits). 
B)  Although increased market share is a primary goal of some firms, others see it as a means to other ends, such as increased sales or profits. 
C)  Selecting market share as a pricing objective is particularly effective if industry sales are growing. 
D)  An advantage of market share as a pricing objective is that it is particularly insensitive to competitors' actions. 
E)  Ironically, a market share objective is realized by raising prices in order to increase consumer confidence during the decline stage of a product's life cycle. 
A)  A market share objective is often difficult for product managers since stockholders are looking for immediate dividends (return of profits). 
B)  Although increased market share is a primary goal of some firms, others see it as a means to other ends, such as increased sales or profits. 
C)  Selecting market share as a pricing objective is particularly effective if industry sales are growing. 
D)  An advantage of market share as a pricing objective is that it is particularly insensitive to competitors' actions. 
E)  Ironically, a market share objective is realized by raising prices in order to increase consumer confidence during the decline stage of a product's life cycle.

Question 17

According to the price equation, final price equals ________ minus allowances plus extra fees.

Accepted Answer

A)  salaries 
B)  list price 
C)  profits 
D)  trade-ins 
E)  taxes 
A)  salaries 
B)  list price 
C)  profits 
D)  trade-ins 
E)  taxes

Question 18

Marketing executives must translate estimates of customer demand into estimates of

Accepted Answer

A)  human and other resources required. 
B)  advertising expenditures that will be required. 
C)  ancillary product support. 
D)  revenues the firm expects to receive. 
E)  supply with a demand curve. 
A)  human and other resources required. 
B)  advertising expenditures that will be required. 
C)  ancillary product support. 
D)  revenues the firm expects to receive. 
E)  supply with a demand curve.

Question 19

The formula Total revenue − Total cost or [(Unit price × Quantity sold) − (Fixed cost + Variable cost)] represents

Accepted Answer

A)  the value equation. 
B)  the sales ratio. 
C)  average revenue. 
D)  the break-even point. 
E)  the profit equation. 
A)  the value equation. 
B)  the sales ratio. 
C)  average revenue. 
D)  the break-even point. 
E)  the profit equation.

Question 20

All of these statements are true about an oligopolistic competitive market situation exceptwhich?

Accepted Answer

A)  The products can be differentiated or undifferentiated. 
B)  Advertising that uses comparative (head-to-head) messages is the norm. 
C)  The purpose of advertising is to inform. 
D)  Sellers try to avoid price competition, which can lead to price wars. 
E)  Firms in these markets stay aware of a competitor's price cuts or increases and may follow suit. 
A)  The products can be differentiated or undifferentiated. 
B)  Advertising that uses comparative (head-to-head) messages is the norm. 
C)  The purpose of advertising is to inform. 
D)  Sellers try to avoid price competition, which can lead to price wars. 
E)  Firms in these markets stay aware of a competitor's price cuts or increases and may follow suit.

Exam 13: Building the Price Foundation

Pricing constraints are

Contribution margin can be expressed on a per unit basis as

In the process of setting price, a marketer must first identify pricing objectives and constraints. Next, in Step 2, three specific estimates are necessary. What are they?

While consumer tastes and price and availability of similar products determine what consumers want to buy, consumer income determines

Washburn Guitars markets its guitars to four distinct market segments. The firm's mass customization instruments are targeted at

What are the six major steps involved in setting prices?

During the iPad's __________ stage of its product life cycle, Apple had great latitude in setting a price for the product because of a lack of competition.

Unit variable cost divided by unit selling price times 100 is the contribution margin expressed

Several companies produce latex gloves that are used in a variety of different industries. If one of the glove manufacturers decreases its price by just a few percentage points, it will result in a significant increase in quantity demanded. The demand for latex gloves is

Variable cost is

A firm's profit equals

Figure 13-7B -The break-even chart for a picture frame store in Figure 13-7 above shows that by selling 200 pictures, the store will

The competitive market situation in which one seller sets the price for a unique product is referred to as

An online movie streaming service charges $14.99 per month for its basic package. However, when a competitor introduced the same service at $13.99, the firm dropped its price to $13.99. The firm most likely made this price reduction in an attempt to

Which of the following statements regarding a market share pricing objective is most accurate?

According to the price equation, final price equals ________ minus allowances plus extra fees.

Marketing executives must translate estimates of customer demand into estimates of

The formula Total revenue − Total cost or [(Unit price × Quantity sold) − (Fixed cost + Variable cost)] represents

All of these statements are true about an oligopolistic competitive market situation exceptwhich?

Creating Customer Relationships and Value Through Marketing

Developing Successful Organizational and Marketing Strategies

Scanning the Marketing Environment

Ethical and Social Responsibility for Sustainable Marketing

Understanding Consumer Behavior

Understanding Organizations As Customers

Understanding and Reaching Global Consumers and Markets

Marketing Research: From Customer Insights to Actions

Market Segmentation, Targeting, and Positioning

Developing New Products and Services

Managing Successful Products, Services, and Brands

Services Marketing

Arriving at the Final Price

Managing Marketing Channels and Supply Chains

Retailing and Wholesaling

Integrated Marketing Communications and Direct Marketing

Advertising, Sales Promotion, and Public Relations

Using Social Media and Mobile Marketing to Connect With Consumers

Personal Selling and Sales Management

Implementing Interactive and Multi-Channel Marketing

Pulling It All Together: the Strategic Marketing Proces

Building an Effective Marketing Plan

Financial Aspects of Marketing

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