Question 1

Price elasticity of demand (E) is expressed as (Δ means change)

Accepted Answer

A)  E = Percentage change in price (%Δ in P) ÷ Percentage change in quantity demanded (%Δ in Q). 
B)  E = Price (P) ÷ Quantity demanded (Q). 
C)  E = Percentage change in quantity demanded (%Δ in Q) ÷ Percentage change in price (%Δ in P). 
D)  E = Quantity demanded (Q) ÷ Price (P). 
E)  E = Quantity demanded (Q) × Price (P). 
A)  E = Percentage change in price (%Δ in P) ÷ Percentage change in quantity demanded (%Δ in Q). 
B)  E = Price (P) ÷ Quantity demanded (Q). 
C)  E = Percentage change in quantity demanded (%Δ in Q) ÷ Percentage change in price (%Δ in P). 
D)  E = Quantity demanded (Q) ÷ Price (P). 
E)  E = Quantity demanded (Q) × Price (P).

Question 2

Figure 11-7
-Suppose you are the owner of a picture frame store. Assume that 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). Figure 11-7a above shows that by selling 200 pictures, your picture frame 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 3

According to the textbook, clothing manufacturer Christian Dior and retailer Neiman Marcus use ________ pricing.

Accepted Answer

A)  above-market 
B)  at-market 
C)  below-market 
D)  prestige 
E)  everyday low 
A)  above-market 
B)  at-market 
C)  below-market 
D)  prestige 
E)  everyday low

Question 4

A custom tailor wishes to use target profit pricing to establish a price for a custom-designed business suit. Assume variable cost is $200 per suit, fixed cost is $44,000, and the target profit is $50,000 based on a volume of 50 suits. What price should be charged for a typical custom suit?

Accepted Answer

A)  $520 
B)  $1,040 
C)  $1,880 
D)  $2,080 
E)  $10,000 
A)  $520 
B)  $1,040 
C)  $1,880 
D)  $2,080 
E)  $10,000

Question 5

The sum of the expenses of a firm that is stable and does not change with the quantity of the product that is produced and sold is referred to as

Accepted Answer

A)  fixed cost. 
B)  total cost. 
C)  variable cost. 
D)  marginal cost. 
E)  overhead cost. 
A)  fixed cost. 
B)  total cost. 
C)  variable cost. 
D)  marginal cost. 
E)  overhead cost.

Question 6

Figure 11-6a
-In the break-even chart in Figure 11-7a, the triangular area FBE represents the firm's

Accepted Answer

A)  fixed costs. 
B)  break-even point. 
C)  variable costs. 
D)  profit. 
E)  total revenue. 
A)  fixed costs. 
B)  break-even point. 
C)  variable costs. 
D)  profit. 
E)  total revenue.

Question 7

Mike Morgan, a sales representative for a major food service distributor of Betty Crocker's Warm Delights, wanted to encourage larger purchases by his grocery customers. Morgan offered 10 percent discount for buying 1 to 49 cases of Warm Delights within a calendar month, 12 percent for 50 to 99 cases, and 15 percent for 100 or more cases. What type of discount was Morgan offering his customers?

Accepted Answer

A)  a seasonal discount 
B)  a quantity discount 
C)  a cash discount 
D)  a trade discount 
E)  a case allowance discount 
A)  a seasonal discount 
B)  a quantity discount 
C)  a cash discount 
D)  a trade discount 
E)  a case allowance discount

Question 8

Unit volume as a pricing objective refers to

Accepted Answer

A)  the quantity of products to be produced or sold. 
B)  the ratio of price per unit to unit variable cost. 
C)  the ratio of production costs to the minimum sales price that would still generate profit. 
D)  the total quantity of product sold by a firm relative to the total quantity of product sold by all firms in the industry. 
E)  variable cost expressed on a per unit basis for a product. 
A)  the quantity of products to be produced or sold. 
B)  the ratio of price per unit to unit variable cost. 
C)  the ratio of production costs to the minimum sales price that would still generate profit. 
D)  the total quantity of product sold by a firm relative to the total quantity of product sold by all firms in the industry. 
E)  variable cost expressed on a per unit basis for a product.

Question 9

When estimating demand, price is not the only factor to be considered. Three other elements emphasized by economists are consumer tastes, price and availability of similar products, and

Accepted Answer

A)  consumer income. 
B)  consumer psychographics. 
C)  size of the target market. 
D)  current political agendas. 
E)  green substitutes. 
A)  consumer income. 
B)  consumer psychographics. 
C)  size of the target market. 
D)  current political agendas. 
E)  green substitutes.

Question 10

A single jar of original formula Carmex has different prices for the product depending upon where it is sold, but each price will end in a nine ($0.99 at mass merchandisers like Walmart or Target; $1.59 at drugstores; and $1.79 at grocery stores). This pricing strategy is called

Accepted Answer

A)  standard pricing 
B)  odd-even pricing. 
C)  customary pricing. 
D)  everyday lower pricing. 
E)  at-market pricing. 
A)  standard pricing 
B)  odd-even pricing. 
C)  customary pricing. 
D)  everyday lower pricing. 
E)  at-market pricing.

Question 11

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 12

Which of the following statements regarding cost-oriented approaches is most accurate?

Accepted Answer

A)  These methods focus on the demand side of the pricing problem. 
B)  These methods account for production, marketing, and overhead expenses. 
C)  Skimming is an example of a cost-oriented method. 
D)  These methods are simple to use because costs predictably decrease with each doubling of production. 
E)  Cost-oriented approaches are a subcategory of competition-oriented methods. 
A)  These methods focus on the demand side of the pricing problem. 
B)  These methods account for production, marketing, and overhead expenses. 
C)  Skimming is an example of a cost-oriented method. 
D)  These methods are simple to use because costs predictably decrease with each doubling of production. 
E)  Cost-oriented approaches are a subcategory of competition-oriented methods.

Question 13

Identifying pricing objectives and constraints would occur during which stage of the price-setting process?

Accepted Answer

A)  Selecting an approximate price level 
B)  Defining the scope of the product 
C)  Setting the list or quoted price 
D)  Evaluating the success of the price strategy 
E)  Making special adjustments to the list price 
A)  Selecting an approximate price level 
B)  Defining the scope of the product 
C)  Setting the list or quoted price 
D)  Evaluating the success of the price strategy 
E)  Making special adjustments to the list price

Question 14

Penetration pricing is considered to be a ________ approach to pricing.

Accepted Answer

A)  demand-oriented 
B)  cost-oriented 
C)  profit-oriented 
D)  competition-oriented 
E)  service-oriented 
A)  demand-oriented 
B)  cost-oriented 
C)  profit-oriented 
D)  competition-oriented 
E)  service-oriented

Question 15

Which of the following would be an example of a fixed cost for a company that makes carbon monoxide monitoring systems for workers to wear in hazardous areas?

Accepted Answer

A)  the lithium batteries that are used in each monitor 
B)  the chest harness used to wear the monitor 
C)  the insurance for the company's factory 
D)  the free training videos that are sent to each new customer 
E)  the stainless-steel, water-resistant cases in which the monitors are stored 
A)  the lithium batteries that are used in each monitor 
B)  the chest harness used to wear the monitor 
C)  the insurance for the company's factory 
D)  the free training videos that are sent to each new customer 
E)  the stainless-steel, water-resistant cases in which the monitors are stored

Question 16

A negative aspect of selecting unit volume as a pricing objective is that

Accepted Answer

A)  production often cannot keep up with demand. 
B)  there are increased carrying costs with extensive inventories. 
C)  if price reductions are used to achieve volume objectives, it can sometimes come at the expense of profits. 
D)  it can create competition between divisions within the organization itself, causing conflicts over the allocation of resources. 
E)  it always positively correlates with a sales revenue objective. 
A)  production often cannot keep up with demand. 
B)  there are increased carrying costs with extensive inventories. 
C)  if price reductions are used to achieve volume objectives, it can sometimes come at the expense of profits. 
D)  it can create competition between divisions within the organization itself, causing conflicts over the allocation of resources. 
E)  it always positively correlates with a sales revenue objective.

Question 17

Figure 11-6
-The owner of a picture frame store has generated a spreadsheet of several calculations based on different quantity, price, revenue, cost, and profit scenarios shown in Figure 11-6 above. Of the following options, at what sales level is profit maximized?

Accepted Answer

A)  0 
B)  400 
C)  800 
D)  1,600 
E)  2,000 
A)  0 
B)  400 
C)  800 
D)  1,600 
E)  2,000

Question 18

List four of the seven demand-oriented approaches to selecting an approximate price level and define what they are.

Accepted Answer

Demand-oriented approaches are (1) skimm

Question 19

Break-even analysis is

Accepted Answer

A)  a process that investigates the difference between marginal revenue and marginal cost. 
B)  a method of determining just how much a consumer is willing to pay for a product or service. 
C)  a technique that analyzes the relationship between total revenue and total cost to determine profitability at various levels of output. 
D)  the process of determining the quantity of product consumers will buy relative to the quantity produced by the firm. 
E)  the graph that shows the maximum number of products consumers will buy at a given price. 
A)  a process that investigates the difference between marginal revenue and marginal cost. 
B)  a method of determining just how much a consumer is willing to pay for a product or service. 
C)  a technique that analyzes the relationship between total revenue and total cost to determine profitability at various levels of output. 
D)  the process of determining the quantity of product consumers will buy relative to the quantity produced by the firm. 
E)  the graph that shows the maximum number of products consumers will buy at a given price.

Question 20

A new car dealer can reduce the price you pay without cutting the list price of a new Ford F-150 pickup truck by offering you a ________ of $1,000 for your 2006 Nissan Altima.

Accepted Answer

A)  cash discount 
B)  functional discount 
C)  seasonal discount 
D)  trade-in allowance 
E)  promotional allowance 
A)  cash discount 
B)  functional discount 
C)  seasonal discount 
D)  trade-in allowance 
E)  promotional allowance

Price elasticity of demand (E) is expressed as (Δ means change)

According to the textbook, clothing manufacturer Christian Dior and retailer Neiman Marcus use ________ pricing.

A custom tailor wishes to use target profit pricing to establish a price for a custom-designed business suit. Assume variable cost is $200 per suit, fixed cost is $44,000, and the target profit is $50,000 based on a volume of 50 suits. What price should be charged for a typical custom suit?

The sum of the expenses of a firm that is stable and does not change with the quantity of the product that is produced and sold is referred to as

Figure 11-6a -In the break-even chart in Figure 11-7a, the triangular area FBE represents the firm's

Unit volume as a pricing objective refers to

When estimating demand, price is not the only factor to be considered. Three other elements emphasized by economists are consumer tastes, price and availability of similar products, and

A single jar of original formula Carmex has different prices for the product depending upon where it is sold, but each price will end in a nine ($0.99 at mass merchandisers like Walmart or Target; $1.59 at drugstores; and $1.79 at grocery stores). This pricing strategy is called

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

Which of the following statements regarding cost-oriented approaches is most accurate?

Identifying pricing objectives and constraints would occur during which stage of the price-setting process?

Penetration pricing is considered to be a ________ approach to pricing.

Which of the following would be an example of a fixed cost for a company that makes carbon monoxide monitoring systems for workers to wear in hazardous areas?

A negative aspect of selecting unit volume as a pricing objective is that

Figure 11-6 -The owner of a picture frame store has generated a spreadsheet of several calculations based on different quantity, price, revenue, cost, and profit scenarios shown in Figure 11-6 above. Of the following options, at what sales level is profit maximized?

List four of the seven demand-oriented approaches to selecting an approximate price level and define what they are.

Break-even analysis is

A new car dealer can reduce the price you pay without cutting the list price of a new Ford F-150 pickup truck by offering you a ________ of $1,000 for your 2006 Nissan Altima.

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

Price elasticity of demand (E) is expressed as (Δ means change)

According to the textbook, clothing manufacturer Christian Dior and retailer Neiman Marcus use ________ pricing.

A custom tailor wishes to use target profit pricing to establish a price for a custom-designed business suit. Assume variable cost is $200 per suit, fixed cost is $44,000, and the target profit is $50,000 based on a volume of 50 suits. What price should be charged for a typical custom suit?

The sum of the expenses of a firm that is stable and does not change with the quantity of the product that is produced and sold is referred to as

Figure 11-6a -In the break-even chart in Figure 11-7a, the triangular area FBE represents the firm's

Unit volume as a pricing objective refers to

When estimating demand, price is not the only factor to be considered. Three other elements emphasized by economists are consumer tastes, price and availability of similar products, and

A single jar of original formula Carmex has different prices for the product depending upon where it is sold, but each price will end in a nine ($0.99 at mass merchandisers like Walmart or Target; $1.59 at drugstores; and $1.79 at grocery stores). This pricing strategy is called

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

Which of the following statements regarding cost-oriented approaches is most accurate?

Identifying pricing objectives and constraints would occur during which stage of the price-setting process?

Penetration pricing is considered to be a ________ approach to pricing.

Which of the following would be an example of a fixed cost for a company that makes carbon monoxide monitoring systems for workers to wear in hazardous areas?

A negative aspect of selecting unit volume as a pricing objective is that

Figure 11-6 -The owner of a picture frame store has generated a spreadsheet of several calculations based on different quantity, price, revenue, cost, and profit scenarios shown in Figure 11-6 above. Of the following options, at what sales level is profit maximized?

List four of the seven demand-oriented approaches to selecting an approximate price level and define what they are.

Break-even analysis is

A new car dealer can reduce the price you pay without cutting the list price of a new Ford F-150 pickup truck by offering you a ________ of $1,000 for your 2006 Nissan Altima.

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