Question 1

When the Swiss watchmaker TAG Heuer quadrupled the average price of its watches, its sales volume jumped sevenfold. The likely cause of this volume increase is

Accepted Answer

A)  because the watch market is highly conservative. 
B)  because economies of scale in production would be substantial. 
C)  because retailers are not willing to carry new brands of watches in this category. 
D)  because once the initial price is set, it is nearly impossible to lower the price without alienating early buyers. 
E)  because the watch category frequently uses prestige pricing, wherein lower prices may result in lower sales. 
A)  because the watch market is highly conservative. 
B)  because economies of scale in production would be substantial. 
C)  because retailers are not willing to carry new brands of watches in this category. 
D)  because once the initial price is set, it is nearly impossible to lower the price without alienating early buyers. 
E)  because the watch category frequently uses prestige pricing, wherein lower prices may result in lower sales.

Question 2

Using a price that is dictated by tradition, a standardized channel of distribution, or other competitive factors is referred to as

Accepted Answer

A)  cost-plus pricing. 
B)  customary pricing. 
C)  standard markup pricing. 
D)  loss-leader pricing. 
E)  target profit pricing. 
A)  cost-plus pricing. 
B)  customary pricing. 
C)  standard markup pricing. 
D)  loss-leader pricing. 
E)  target profit pricing.

Question 3

Explain predatory pricing.

Accepted Answer

Predatory pricing is the practice of cha

Question 4

Unit variable cost refers to variable cost expressed

Accepted Answer

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

Question 5

Forever Quilting is a small company that makes quilting kits priced at $120 each. There is no quantity discount. The costs of the materials that go into each kit total $45. It costs $5 in labor to assemble a kit. The company has monthly expenses of $1,000 for rent and insurance, $200 for heat and electricity, $500 for advertising, and $4,500 for the monthly salary of its owner. Last month the company sold 150 kits. Forever Quilting's total revenue for the month was

Accepted Answer

A)  $4,300. 
B)  $6,200. 
C)  $7,500. 
D)  $10,500. 
E)  $18,000. 
A)  $4,300. 
B)  $6,200. 
C)  $7,500. 
D)  $10,500. 
E)  $18,000.

Question 6

A one-price policy refers to

Accepted Answer

A)  setting different prices for products and services in real time in response to supply and demand conditions. 
B)  setting the price of an entire line of products at a single specific pricing point. 
C)  simultaneously setting prices for all items in a product line to cover the total cost and produce a profit for the complete line, not necessarily for each item. 
D)  adding a fixed percentage to the cost of all items in a specific product class. 
E)  setting one price for all buyers of a product or service. 
A)  setting different prices for products and services in real time in response to supply and demand conditions. 
B)  setting the price of an entire line of products at a single specific pricing point. 
C)  simultaneously setting prices for all items in a product line to cover the total cost and produce a profit for the complete line, not necessarily for each item. 
D)  adding a fixed percentage to the cost of all items in a specific product class. 
E)  setting one price for all buyers of a product or service.

Question 7

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 8

Which of the following statements most likely would account for the shift in the demand curve from D1 to D2 shown in Figure 11-3b above?

Accepted Answer

A)  The firm increased its prices and consumers perceived the value of the product to be greater. 
B)  There were fewer product substitutes available in the marketplace. 
C)  Competitors in the market raised their prices. 
D)  A recession occurred that raised consumers' incomes. 
E)  The firm's price remained the same but changes occurred in consumer tastes. 
A)  The firm increased its prices and consumers perceived the value of the product to be greater. 
B)  There were fewer product substitutes available in the marketplace. 
C)  Competitors in the market raised their prices. 
D)  A recession occurred that raised consumers' incomes. 
E)  The firm's price remained the same but changes occurred in consumer tastes.

Question 9

A major grocery chain pays its baggers a regular hourly wage. The baggers not only pack the groceries, but they also will take customers' groceries to their car, regardless of the weather. The baggers are not permitted to accept tips, even if they are offered. The consumer will experience this shopping experience as

Accepted Answer

A)  pricing enhancement. 
B)  societal pricing. 
C)  revenue sharing. 
D)  value-pricing. 
E)  cost-plus pricing. 
A)  pricing enhancement. 
B)  societal pricing. 
C)  revenue sharing. 
D)  value-pricing. 
E)  cost-plus pricing.

Question 10

A company that manages apartments decides to buy 15 new dishwashers at a list price of $550 each as replacements for old dishwashers in a small apartment complex it owns. Because the company is buying more than 10 dishwashers, it is eligible for a $150-per-unit quantity discount. Financing charges total $20 per unit. The company gets $10 per dishwasher for the 15 dishwashers traded in. What is the final price the company will pay for each dishwasher?

Accepted Answer

A)  $390 
B)  $400 
C)  $410 
D)  $430 
E)  $730 
A)  $390 
B)  $400 
C)  $410 
D)  $430 
E)  $730

Question 11

What is loss-leader pricing and why do retailers use it?

Accepted Answer

For a special promotion, many retail sto

Question 12

What are two special adjustments to the list or quoted price?

Accepted Answer

Two special adjustments to the

Question 13

The maximum quantity of products consumers will buy at given price is shown by

Accepted Answer

A)  a demand curve. 
B)  a price constraint. 
C)  a break-even point. 
D)  a supply curve. 
E)  a marginal revenue curve. 
A)  a demand curve. 
B)  a price constraint. 
C)  a break-even point. 
D)  a supply curve. 
E)  a marginal revenue curve.

Question 14

Calculate a firm's profit using the following information: the unit price (P) for a product is $40; the quantity sold (Q) is 2,000; the fixed cost (FC) is $50,000; and the variable cost (VC) is $20,000.

Accepted Answer

A)  $10,000 
B)  $50,000 
C)  $110,000 
D)  $150,000 
E)  cannot be determined with the information provided 
A)  $10,000 
B)  $50,000 
C)  $110,000 
D)  $150,000 
E)  cannot be determined with the information provided

Question 15

Several factors indicate that a penetration pricing policy would most likely be effective when introducing a new product, including situations in which

Accepted Answer

A)  lowering the price has only a minor effect on increasing the sales volume and reducing the unit cost. 
B)  the high initial price will not attract competitors. 
C)  customers interpret the high price as signifying high quality. 
D)  enough prospective customers are willing to buy immediately at the high initial price to make these sales profitable. 
E)  many segments of the market are price-sensitive. 
A)  lowering the price has only a minor effect on increasing the sales volume and reducing the unit cost. 
B)  the high initial price will not attract competitors. 
C)  customers interpret the high price as signifying high quality. 
D)  enough prospective customers are willing to buy immediately at the high initial price to make these sales profitable. 
E)  many segments of the market are price-sensitive.

Question 16

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

Accepted Answer

A)  predatory pricing 
B)  value-pricing 
C)  loss-leader pricing 
D)  odd-even pricing 
E)  barter 
A)  predatory pricing 
B)  value-pricing 
C)  loss-leader pricing 
D)  odd-even pricing 
E)  barter

Question 17

Barter is

Accepted Answer

A)  a reciprocity agreement stipulating that if company A purchases services from company B, then company B must purchase similar services from company A. 
B)  a tying agreement stipulating that if company A purchases a product from company B, it must also purchase one of its services. 
C)  the practice of exchanging products and services for other products and services rather than for money. 
D)  the practice of exchanging services for products of equal or greater value. 
E)  the practice of exchanging products and services for money. 
A)  a reciprocity agreement stipulating that if company A purchases services from company B, then company B must purchase similar services from company A. 
B)  a tying agreement stipulating that if company A purchases a product from company B, it must also purchase one of its services. 
C)  the practice of exchanging products and services for other products and services rather than for money. 
D)  the practice of exchanging services for products of equal or greater value. 
E)  the practice of exchanging products and services for money.

Question 18

Penetration pricing is intended to appeal to which market?

Accepted Answer

A)  highly selective, quality-seeking consumers 
B)  price-insensitive markets 
C)  specialty product markets 
D)  the same markets as those targeted with a skimming pricing strategy 
E)  the mass market 
A)  highly selective, quality-seeking consumers 
B)  price-insensitive markets 
C)  specialty product markets 
D)  the same markets as those targeted with a skimming pricing strategy 
E)  the mass market

Question 19

Which of the following is a cost-oriented pricing method?

Accepted Answer

A)  loss-leader pricing 
B)  standard markup pricing 
C)  at-, above-, or below-market pricing 
D)  price lining 
E)  penetration pricing 
A)  loss-leader pricing 
B)  standard markup pricing 
C)  at-, above-, or below-market pricing 
D)  price lining 
E)  penetration pricing

Question 20

Figure 11-3a
-Figure 11-3a shows shows that when the quantity demanded for Red Baron frozen cheese pizzas moves from 2 to 3 million units along the demand curve D1, the profit

Accepted Answer

A)  increases from $6 to $8 per unit. 
B)  decreases from $8 to $6 per unit. 
C)  stays the same per unit. 
D)  increases from $2 to $3 per unit. 
E)  impacts cannot be determined. Figure 11-3a does not indicate what happens to profit when the quantity demanded changes. 
A)  increases from $6 to $8 per unit. 
B)  decreases from $8 to $6 per unit. 
C)  stays the same per unit. 
D)  increases from $2 to $3 per unit. 
E)  impacts cannot be determined. Figure 11-3a does not indicate what happens to profit when the quantity demanded changes.

When the Swiss watchmaker TAG Heuer quadrupled the average price of its watches, its sales volume jumped sevenfold. The likely cause of this volume increase is

Using a price that is dictated by tradition, a standardized channel of distribution, or other competitive factors is referred to as

Explain predatory pricing.

Unit variable cost refers to variable cost expressed

A one-price policy refers to

Variable cost is

Which of the following statements most likely would account for the shift in the demand curve from D1 to D2 shown in Figure 11-3b above?

What is loss-leader pricing and why do retailers use it?

What are two special adjustments to the list or quoted price?

The maximum quantity of products consumers will buy at given price is shown by

Calculate a firm's profit using the following information: the unit price (P) for a product is $40; the quantity sold (Q) is 2,000; the fixed cost (FC) is $50,000; and the variable cost (VC) is $20,000.

Several factors indicate that a penetration pricing policy would most likely be effective when introducing a new product, including situations in which

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

Barter is

Penetration pricing is intended to appeal to which market?

Which of the following is a cost-oriented pricing method?

Figure 11-3a -Figure 11-3a shows shows that when the quantity demanded for Red Baron frozen cheese pizzas moves from 2 to 3 million units along the demand curve D1, the profit

Creating Customer Relationships and Value Through Marketing

Developing Successful Organizational and Marketing Strategies

Understanding the Marketing Environment, Ethical Behavior, and Social Responsibility

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

Managing Marketing Channels and Supply Chains

Retailing and Wholesaling

Implementing Interactive and Multichannel Marketing

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

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Exam 11: Pricing Products and Services

When the Swiss watchmaker TAG Heuer quadrupled the average price of its watches, its sales volume jumped sevenfold. The likely cause of this volume increase is

Using a price that is dictated by tradition, a standardized channel of distribution, or other competitive factors is referred to as

Explain predatory pricing.

Unit variable cost refers to variable cost expressed

A one-price policy refers to

Variable cost is

Which of the following statements most likely would account for the shift in the demand curve from D1 to D2 shown in Figure 11-3b above?

What is loss-leader pricing and why do retailers use it?

What are two special adjustments to the list or quoted price?

The maximum quantity of products consumers will buy at given price is shown by

Calculate a firm's profit using the following information: the unit price (P) for a product is $40; the quantity sold (Q) is 2,000; the fixed cost (FC) is $50,000; and the variable cost (VC) is $20,000.

Several factors indicate that a penetration pricing policy would most likely be effective when introducing a new product, including situations in which

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

Barter is

Penetration pricing is intended to appeal to which market?

Which of the following is a cost-oriented pricing method?

Figure 11-3a -Figure 11-3a shows shows that when the quantity demanded for Red Baron frozen cheese pizzas moves from 2 to 3 million units along the demand curve D1, the profit

Creating Customer Relationships and Value Through Marketing

Developing Successful Organizational and Marketing Strategies

Understanding the Marketing Environment, Ethical Behavior, and Social Responsibility

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

Managing Marketing Channels and Supply Chains

Retailing and Wholesaling

Implementing Interactive and Multichannel Marketing

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

Filters