Question 1

A concession in price in business markets to achieve a desired goal is called a(n)

Accepted Answer

A)  allowance. 
B)  objective-oriented discount. 
C)  cash discount. 
D)  trade discount. 
E)  cumulative discount. 
A)  allowance. 
B)  objective-oriented discount. 
C)  cash discount. 
D)  trade discount. 
E)  cumulative discount.

Question 2

The fact that a gas station in Texas pays less for fuel than a gas station in Maine from a producer in Louisiana suggests that refineries are using which of the following pricing methods?

Accepted Answer

A)  Price differentiation 
B)  Base-point pricing 
C)  Freight absorption pricing 
D)  Transfer pricing 
E)  Zone pricing 
A)  Price differentiation 
B)  Base-point pricing 
C)  Freight absorption pricing 
D)  Transfer pricing 
E)  Zone pricing

Question 3

Ethan is an operations unit manager for Morningstar Foods. So far in developing his monthly budget, he has identified the following costs: Overhead at $120,000; Packaging at $70,000; Advertising at $60,000; Salaries at $400,000; Food production at $90,000; and Distribution at $22,000. The fixed costs in this situation would be

Accepted Answer

A)  overhead, packaging, advertising, salaries, food production, and distribution. 
B)  overhead, packaging, advertising, salaries, and distribution. 
C)  overhead, advertising, distribution, and salaries. 
D)  overhead, advertising, and salaries. 
E)  overhead. 
A)  overhead, packaging, advertising, salaries, food production, and distribution. 
B)  overhead, packaging, advertising, salaries, and distribution. 
C)  overhead, advertising, distribution, and salaries. 
D)  overhead, advertising, and salaries. 
E)  overhead.

Question 4

The Panama Jack Company utilizes a special strategy to sell its ECO-shirt line. Its basic promotional tool is the discount. These discounts offered to middlemen for performing certain channel activities are referred to as ____ discounts.

Accepted Answer

A)  trade 
B)  cumulative 
C)  noncumulative 
D)  push 
E)  intermediary 
A)  trade 
B)  cumulative 
C)  noncumulative 
D)  push 
E)  intermediary

Question 5

Which of the following statements is true about marginal analysis?

Accepted Answer

A)  Fixed costs vary with changes in the number of units sold. 
B)  Total cost is the sum of average fixed costs and average variable costs times the quantity produced. 
C)  Average variable cost equals variable cost times number of units sold. 
D)  Average fixed cost increases as the number of units produced increases. 
E)  Marginal cost equals fixed costs minus variable costs. 
A)  Fixed costs vary with changes in the number of units sold. 
B)  Total cost is the sum of average fixed costs and average variable costs times the quantity produced. 
C)  Average variable cost equals variable cost times number of units sold. 
D)  Average fixed cost increases as the number of units produced increases. 
E)  Marginal cost equals fixed costs minus variable costs.

Question 6

Phillip is meeting with his supervisor, Karen. Their company has just developed a new product that they think has strong market potential. However, just last week their top competitor announced that it was launching a similar product. Phillip and Karen are trying to come up with a counter-strategy to make sure their competitor does not gain market share. Karen recommends that they price their product really low, so low that their competitor will not be able to compete. Because this product is priced toward price-conscious consumers, their target market is likely to view prices as highly attractive. Phillip maintains that they will lose too much money if they price the new product that low. It is not sustainable. Karen suggests that they only price the product extremely low to drive their competitor out of that particular market. After their competitor has left the market, then they can raise prices once again. Phillip tells Karen he is not sure this is legal if their sole intent is to drive out the competition. He informs Karen that this is a type of

Accepted Answer

A)  predatory pricing. 
B)  price gouging. 
C)  price discrimination. 
D)  price fixing. 
E)  deceptive pricing. 
A)  predatory pricing. 
B)  price gouging. 
C)  price discrimination. 
D)  price fixing. 
E)  deceptive pricing.

Question 7

When a customer is considering the purchase of a product in a less-familiar product category, that individual is likely to rely more heavily on

Accepted Answer

A)  internal reference prices. 
B)  symbol prices. 
C)  high value products. 
D)  discounted reference prices. 
E)  external reference prices. 
A)  internal reference prices. 
B)  symbol prices. 
C)  high value products. 
D)  discounted reference prices. 
E)  external reference prices.

Question 8

Nicole is out shopping with her friends for the day. While evaluating a decision to purchase a handbag, she says, "People notice when you buy the most expensive brand of a product." Nicole is most likely a _____ consumer.

Accepted Answer

A)  price-conscious 
B)  quality-conscious 
C)  value-conscious 
D)  socially-conscious 
E)  prestige-sensitive 
A)  price-conscious 
B)  quality-conscious 
C)  value-conscious 
D)  socially-conscious 
E)  prestige-sensitive

Question 9

Nonprice competition does not permit unique product features, higher product quality, and customer service.

Accepted Answer

A) True 
 B)False

Question 10

Electricity is an example of a product that is price elastic.

Accepted Answer

A) True 
 B)False

Question 11

Maria Alvarez recently opened a clothing boutique catering to women aged 20 to 60 who are seeking on-trend fashions at an economical price point. Maria focuses on customer service and offers her customers personal styling advice, closet audits, and a generous return policy. She's developing quite a following and has found that social media is a great way to market her business and showcase new arrivals. Since she orders limited numbers of items in a size range, customers know they must call or stop by the shop if they see something posted on Instagram or Facebook that they'd like to own. Maria sells most of her clothing at full price and only offers a "sale" twice each year. Maria was recently asked to speak with a marketing class about pricing and how to run a profitable business. She was reviewing some information to prepare for the class and wanted to emphasize to the students the importance of identifying fixed costs, variable costs, marginal costs, and marginal revenue as well as their relationship to profitability. Maria planned to demonstrate that profits will be at their highest when

Accepted Answer

A)  marginal costs equal marginal revenue. 
B)  fixed costs are less than marginal revenue. 
C)  variable costs are less than fixed costs. 
D)  marginal revenue equals fixed costs. 
A)  marginal costs equal marginal revenue. 
B)  fixed costs are less than marginal revenue. 
C)  variable costs are less than fixed costs. 
D)  marginal revenue equals fixed costs.

Question 12

Safe Auto advertises its automobile insurance as "minimum coverage for minimum budgets." Safe Auto is engaging in

Accepted Answer

A)  nonprice competition. 
B)  demand-based pricing. 
C)  competitive pricing. 
D)  price differentiation. 
E)  price competition. 
A)  nonprice competition. 
B)  demand-based pricing. 
C)  competitive pricing. 
D)  price differentiation. 
E)  price competition.

Question 13

What are reference prices and how do customers use them? What is the difference between internal and external reference prices?

Accepted Answer

Reference pricing means pricing a produc

Question 14

The Highland Racquet Club found that with annual fixed costs of $60,000, its breakeven point is 2,000 members when the membership charge is $60 per person per year. What is the variable cost per person for Highland?

Accepted Answer

A)  $45 
B)  $50 
C)  $30 
D)  $25 
E)  $40 
A)  $45 
B)  $50 
C)  $30 
D)  $25 
E)  $40

Question 15

Generally, customers are most likely to rely on the price-quality association when

Accepted Answer

A)  they cannot judge the quality of the product for themselves. 
B)  the product is a well-known brand. 
C)  customers can judge the product's quality for themselves. 
D)  the product is purchased through the use of the Internet. 
E)  products are being purchased from well-established retailers that are familiar to customers. 
A)  they cannot judge the quality of the product for themselves. 
B)  the product is a well-known brand. 
C)  customers can judge the product's quality for themselves. 
D)  the product is purchased through the use of the Internet. 
E)  products are being purchased from well-established retailers that are familiar to customers.

Question 16

Scenario 19.2 Use the following to answer the questions.
The BASF Chemical Company in Germany has developed a new rubberized coating. The product has an application for cell phones and other hand-held electronic devices that gives them protection from falls and scratches. BASF plans to market the product directly to businesses that manufacture the casings for these types of products. BASF currently uses a system of salespeople headquartered in Germany, while its primary business customers are in China.
Refer to Scenario 19.2. BASF has decided to offer discounts to its business customers in the form of the following: For each order of $100,000 or more during the next 90 days, the buyer will receive a rebate of 5%. This type of pricing would be an example of ____ discounts.

Accepted Answer

A)  allowance 
B)  cash 
C)  seasonal 
D)  noncumulative 
E)  cumulative 
A)  allowance 
B)  cash 
C)  seasonal 
D)  noncumulative 
E)  cumulative

Question 17

If Stephen and Andres each own their own gas station, and they get together to set agreed-upon prices, this is an example of deceptive pricing.

Accepted Answer

A) True 
 B)False

Question 18

Predatory pricing is difficult to prove.

Accepted Answer

A) True 
 B)False

Question 19

Organizational goals have little to do with pricing decisions.

Accepted Answer

A) True 
 B)False

Question 20

An attorney general in Missouri filed a lawsuit against a well-known pharmacy. According to the attorney general, the pharmacy had prices listed on store shelves that were different than the prices charged at the register, resulting in consumers having to pay more. This would most likely be an example of

Accepted Answer

A)  price fixing. 
B)  price discrimination. 
C)  predatory pricing. 
D)  deceptive pricing. 
E)  price wars. 
A)  price fixing. 
B)  price discrimination. 
C)  predatory pricing. 
D)  deceptive pricing. 
E)  price wars.

A concession in price in business markets to achieve a desired goal is called a(n)

The fact that a gas station in Texas pays less for fuel than a gas station in Maine from a producer in Louisiana suggests that refineries are using which of the following pricing methods?

The Panama Jack Company utilizes a special strategy to sell its ECO-shirt line. Its basic promotional tool is the discount. These discounts offered to middlemen for performing certain channel activities are referred to as ____ discounts.

Which of the following statements is true about marginal analysis?

When a customer is considering the purchase of a product in a less-familiar product category, that individual is likely to rely more heavily on

Nicole is out shopping with her friends for the day. While evaluating a decision to purchase a handbag, she says, "People notice when you buy the most expensive brand of a product." Nicole is most likely a _____ consumer.

Nonprice competition does not permit unique product features, higher product quality, and customer service.

Electricity is an example of a product that is price elastic.

Safe Auto advertises its automobile insurance as "minimum coverage for minimum budgets." Safe Auto is engaging in

What are reference prices and how do customers use them? What is the difference between internal and external reference prices?

The Highland Racquet Club found that with annual fixed costs of $60,000, its breakeven point is 2,000 members when the membership charge is $60 per person per year. What is the variable cost per person for Highland?

Generally, customers are most likely to rely on the price-quality association when

If Stephen and Andres each own their own gas station, and they get together to set agreed-upon prices, this is an example of deceptive pricing.

Predatory pricing is difficult to prove.

Organizational goals have little to do with pricing 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 concession in price in business markets to achieve a desired goal is called a(n)

The fact that a gas station in Texas pays less for fuel than a gas station in Maine from a producer in Louisiana suggests that refineries are using which of the following pricing methods?

The Panama Jack Company utilizes a special strategy to sell its ECO-shirt line. Its basic promotional tool is the discount. These discounts offered to middlemen for performing certain channel activities are referred to as ____ discounts.

Which of the following statements is true about marginal analysis?

When a customer is considering the purchase of a product in a less-familiar product category, that individual is likely to rely more heavily on

Nicole is out shopping with her friends for the day. While evaluating a decision to purchase a handbag, she says, "People notice when you buy the most expensive brand of a product." Nicole is most likely a _____ consumer.

Nonprice competition does not permit unique product features, higher product quality, and customer service.

Electricity is an example of a product that is price elastic.

Safe Auto advertises its automobile insurance as "minimum coverage for minimum budgets." Safe Auto is engaging in

What are reference prices and how do customers use them? What is the difference between internal and external reference prices?

The Highland Racquet Club found that with annual fixed costs of $60,000, its breakeven point is 2,000 members when the membership charge is $60 per person per year. What is the variable cost per person for Highland?

Generally, customers are most likely to rely on the price-quality association when

If Stephen and Andres each own their own gas station, and they get together to set agreed-upon prices, this is an example of deceptive pricing.

Predatory pricing is difficult to prove.

Organizational goals have little to do with pricing 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