Question 1

A price developed in the consumer's mind through experience with the product is called a(n)

Accepted Answer

A)  external reference price. 
B)  value-price guideline. 
C)  frame of reference. 
D)  internalized price. 
E)  internal reference price. 
A)  external reference price. 
B)  value-price guideline. 
C)  frame of reference. 
D)  internalized price. 
E)  internal reference price.

Question 2

Which of the following statements about nonprice competition is false?

Accepted Answer

A)  Companies that use nonprice competition do not need to keep track of their competitor's prices. 
B)  A company must be able to distinguish its brand through some unique feature in order to successfully engage in nonprice competition. 
C)  A firm using nonprice competition can build loyalty to both its company and its products. 
D)  When using nonprice competition, a company should promote the distinguishing characteristics of its brand. 
E)  Buyers must view the distinguishing characteristics of a product offered through nonprice competition as being important. 
A)  Companies that use nonprice competition do not need to keep track of their competitor's prices. 
B)  A company must be able to distinguish its brand through some unique feature in order to successfully engage in nonprice competition. 
C)  A firm using nonprice competition can build loyalty to both its company and its products. 
D)  When using nonprice competition, a company should promote the distinguishing characteristics of its brand. 
E)  Buyers must view the distinguishing characteristics of a product offered through nonprice competition as being important.

Question 3

The Palasi Candy Company is a small business located in the northeastern United States. The owner of Palasi Candy is calculating the projected costs for the coming year. There is rent for the building; salaries for the retail employees; raw materials of sugar, chocolate, and other ingredients; wrappers for packaging of individual pieces of candy; boxes; and radio advertising. Palasi's ______ are most likely to be the raw materials of sugar, chocolate, and other ingredients, as well as the wrappers.

Accepted Answer

A)  sunk costs 
B)  variable costs 
C)  direct costs 
D)  fixed costs 
E)  marginal costs 
A)  sunk costs 
B)  variable costs 
C)  direct costs 
D)  fixed costs 
E)  marginal costs

Question 4

Explain what is meant by price elasticity of demand.

Accepted Answer

Price elasticity of demand provides a me

Question 5

Reductions for transportation and other costs related to the physical distance between buyer and seller are known as

Accepted Answer

A)  base-point pricing. 
B)  freight absorption pricing. 
C)  price zoning. 
D)  location pricing. 
E)  geographic pricing. 
A)  base-point pricing. 
B)  freight absorption pricing. 
C)  price zoning. 
D)  location pricing. 
E)  geographic pricing.

Question 6

Predatory pricing involves having the ability to set prices so excessively high that only the highest income consumers can afford them.

Accepted Answer

A) True 
 B)False

Question 7

In setting price, it is wise to analyze competitors' prices.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following acts does not directly affect pricing decisions?

Accepted Answer

A)  Sherman Antitrust Act 
B)  Federal Trade Commission Act 
C)  Wheeler-Lea Act 
D)  Clayton Act 
E)  Simpson-Marshall Act 
A)  Sherman Antitrust Act 
B)  Federal Trade Commission Act 
C)  Wheeler-Lea Act 
D)  Clayton Act 
E)  Simpson-Marshall Act

Question 9

If demand is elastic, a change in price causes a parallel change in total revenue.

Accepted Answer

A) True 
 B)False

Question 10

Which factor is least likely to affect pricing decisions?

Accepted Answer

A)  Competitive prices 
B)  Legal and regulatory issues 
C)  Organizational and marketing objectives 
D)  Customers' interpretation and response 
E)  Shifting stock values 
A)  Competitive prices 
B)  Legal and regulatory issues 
C)  Organizational and marketing objectives 
D)  Customers' interpretation and response 
E)  Shifting stock values

Question 11

If the product price is $100, average variable cost $40 per unit, and the total fixed costs are $120,000, what is the breakeven point?

Accepted Answer

A)  500 units 
B)  2,000 units 
C)  1,200 units 
D)  300 units 
E)  3,000 units 
A)  500 units 
B)  2,000 units 
C)  1,200 units 
D)  300 units 
E)  3,000 units

Question 12

Which of the following statements is true about breakeven analysis?

Accepted Answer

A)  The breakeven point can only be stated in terms of sales revenue. 
B)  At the breakeven point, the firm's fixed costs are greater than its variable costs. 
C)  At the breakeven point, the firm's fixed costs are less than its variable costs. 
D)  At the breakeven point, the firm's sales price per unit equals its variable cost per unit. 
E)  At the breakeven point, the firm's sales revenue equals the sum of its fixed and variable costs. 
A)  The breakeven point can only be stated in terms of sales revenue. 
B)  At the breakeven point, the firm's fixed costs are greater than its variable costs. 
C)  At the breakeven point, the firm's fixed costs are less than its variable costs. 
D)  At the breakeven point, the firm's sales price per unit equals its variable cost per unit. 
E)  At the breakeven point, the firm's sales revenue equals the sum of its fixed and variable costs.

Question 13

Michelin notices that when the number of tires it sells increases from 1,000,000 to 1,000,001, total revenue rises $35. The $35 represents the firm's

Accepted Answer

A)  average revenue. 
B)  marginal revenue. 
C)  price elasticity. 
D)  average variable revenue. 
E)  average total cost. 
A)  average revenue. 
B)  marginal revenue. 
C)  price elasticity. 
D)  average variable revenue. 
E)  average total cost.

Question 14

Which of the following is not a discount provided to business customers?

Accepted Answer

A)  Trade 
B)  Cumulative 
C)  Cash 
D)  Seasonal 
E)  Differentiated 
A)  Trade 
B)  Cumulative 
C)  Cash 
D)  Seasonal 
E)  Differentiated

Question 15

Monopolies usually keep their prices at a level that generates a reasonable, but not excessive, return primarily because

Accepted Answer

A)  they want to avoid new competitors entering their market. 
B)  they want to avoid government regulations on their pricing. 
C)  they try to satisfy the demands of value-conscious consumers. 
D)  firms can increase market share more rapidly this way. 
E)  customers will discontinue use of these products if prices rise. 
A)  they want to avoid new competitors entering their market. 
B)  they want to avoid government regulations on their pricing. 
C)  they try to satisfy the demands of value-conscious consumers. 
D)  firms can increase market share more rapidly this way. 
E)  customers will discontinue use of these products if prices rise.

Question 16

What are the implications of a downward-sloping demand curve?

Accepted Answer

Most firms face downward-sloping demand

Question 17

Myra's company just purchased $600 worth of supplies from Office Depot. The terms for payment are 2/10 net 30. If Myra's firm pays in the next week, it will pay ___________. If Myra's company waits three weeks to pay Office Depot, it will pay _____________.

Accepted Answer

A)  $600; $630 
B)  $588; $600 
C)  $540; $588 
D)  $540; $600 
E)  $588; $630 
A)  $600; $630 
B)  $588; $600 
C)  $540; $588 
D)  $540; $600 
E)  $588; $630

Question 18

You are a senior sales and marketing analyst for a major retailing firm in Wyoming. The marketing manager just stopped by your office with a very frustrated look on her face. She tells you that she is confused as to why, every time the company raises the sales price of its products, total revenue for the company declines.
Based on this information, which of the following explanations do you give her for why this situation occurs?

Accepted Answer

A)  The demand for the company's products is inelastic, so total revenue declines when prices are raised. 
B)  The demand for the company's products is elastic, so total revenue declines when prices are raised. 
C)  The demand for the company's products is elastic, so unit sales increase when prices are raised. 
D)  The demand for the company's products is inelastic, so unit sales increase when prices are raised. 
E)  The demand for the company's products is elastic, so fixed costs increase when prices are raised. 
A)  The demand for the company's products is inelastic, so total revenue declines when prices are raised. 
B)  The demand for the company's products is elastic, so total revenue declines when prices are raised. 
C)  The demand for the company's products is elastic, so unit sales increase when prices are raised. 
D)  The demand for the company's products is inelastic, so unit sales increase when prices are raised. 
E)  The demand for the company's products is elastic, so fixed costs increase when prices are raised.

Question 19

Total costs are influenced by quantities sold.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following is not a major factor for firms making price decisions?

Accepted Answer

A)  Costs 
B)  Competition 
C)  Previous sales 
D)  Channel member expectations 
E)  Legal and regulatory issues 
A)  Costs 
B)  Competition 
C)  Previous sales 
D)  Channel member expectations 
E)  Legal and regulatory issues

A price developed in the consumer's mind through experience with the product is called a(n)

Which of the following statements about nonprice competition is false?

Explain what is meant by price elasticity of demand.

Reductions for transportation and other costs related to the physical distance between buyer and seller are known as

Predatory pricing involves having the ability to set prices so excessively high that only the highest income consumers can afford them.

In setting price, it is wise to analyze competitors' prices.

Which of the following acts does not directly affect pricing decisions?

If demand is elastic, a change in price causes a parallel change in total revenue.

Which factor is least likely to affect pricing decisions?

If the product price is $100, average variable cost $40 per unit, and the total fixed costs are $120,000, what is the breakeven point?

Which of the following statements is true about breakeven analysis?

Michelin notices that when the number of tires it sells increases from 1,000,000 to 1,000,001, total revenue rises $35. The $35 represents the firm's

Which of the following is not a discount provided to business customers?

Monopolies usually keep their prices at a level that generates a reasonable, but not excessive, return primarily because

What are the implications of a downward-sloping demand curve?

Myra's company just purchased $600 worth of supplies from Office Depot. The terms for payment are 2/10 net 30. If Myra's firm pays in the next week, it will pay _. If Myra's company waits three weeks to pay Office Depot, it will pay ___.

Total costs are influenced by quantities sold.

Which of the following is not a major factor for firms making price decisions?

An Overview of Strategic Marketing

Planning, Implementing, and Evaluating Marketing Strategies

The Marketing Environment

Social Responsibility and Ethics in Marketing

Marketing Research and Information Systems

Target Markets, Segmentation and Evaluation

Consumer Buying Behavior

Business Markets and Buying Behavior

Reaching Global Markets

Digital Marketing and Social Networking

Product Concepts, Branding, and Packaging

Developing and Managing Products

Services Marketing

Marketing Channels and Supply Chain Management

Retailing, Direct Marketing and Wholesaling

Integrated Marketing Communications

Advertising and Public Relations

Personal Selling and Sales Promotion

Setting Prices

Filters

Exam 19: Pricing Concepts

A price developed in the consumer's mind through experience with the product is called a(n)

Which of the following statements about nonprice competition is false?

Explain what is meant by price elasticity of demand.

Reductions for transportation and other costs related to the physical distance between buyer and seller are known as

Predatory pricing involves having the ability to set prices so excessively high that only the highest income consumers can afford them.

In setting price, it is wise to analyze competitors' prices.

Which of the following acts does not directly affect pricing decisions?

If demand is elastic, a change in price causes a parallel change in total revenue.

Which factor is least likely to affect pricing decisions?

If the product price is $100, average variable cost $40 per unit, and the total fixed costs are $120,000, what is the breakeven point?

Which of the following statements is true about breakeven analysis?

Michelin notices that when the number of tires it sells increases from 1,000,000 to 1,000,001, total revenue rises $35. The $35 represents the firm's

Which of the following is not a discount provided to business customers?

Monopolies usually keep their prices at a level that generates a reasonable, but not excessive, return primarily because

What are the implications of a downward-sloping demand curve?

Myra's company just purchased $600 worth of supplies from Office Depot. The terms for payment are 2/10 net 30. If Myra's firm pays in the next week, it will pay ___________. If Myra's company waits three weeks to pay Office Depot, it will pay _____________.

Total costs are influenced by quantities sold.

Which of the following is not a major factor for firms making price decisions?

An Overview of Strategic Marketing

Planning, Implementing, and Evaluating Marketing Strategies

The Marketing Environment

Social Responsibility and Ethics in Marketing

Marketing Research and Information Systems

Target Markets, Segmentation and Evaluation

Consumer Buying Behavior

Business Markets and Buying Behavior

Reaching Global Markets

Digital Marketing and Social Networking

Product Concepts, Branding, and Packaging

Developing and Managing Products

Services Marketing

Marketing Channels and Supply Chain Management

Retailing, Direct Marketing and Wholesaling

Integrated Marketing Communications

Advertising and Public Relations

Personal Selling and Sales Promotion

Setting Prices

Filters

Myra's company just purchased $600 worth of supplies from Office Depot. The terms for payment are 2/10 net 30. If Myra's firm pays in the next week, it will pay _. If Myra's company waits three weeks to pay Office Depot, it will pay ___.