Exam 19: Pricing Concepts

Customers always interpret a higher price to mean higher quality.

Profits for a firm are computed as follows: Profits = Total Revenue - Fixed Costs.

Scenario 19.1 Use the following to answer the questions. Concession Supply sells hotdogs, buns, and nacho ingredients to several major league ballparks across the country. Currently, Concession Supply has the following pricing information for one case of hotdogs sold at Wrigley Field: Total fixed costs = $1,200, Selling price = $16, and Variable costs = $6. Refer to Scenario 19.1. What is the breakeven point in dollar sales volume?

Elastic demand is usually a result of the lack of substitute products.

What type of discount is given to a business purchaser for performing activities such as transporting, storing, and selling?

Nonprice competition can be used to establish brand loyalty.

When marketers emphasize price as an issue and match or beat the prices of other companies, they are using

Price is a major component of the profit equation.

Costs are a major issue when establishing price.

Scenario 19.1 Use the following to answer the questions. Concession Supply sells hotdogs, buns, and nacho ingredients to several major league ballparks across the country. Currently, Concession Supply has the following pricing information for one case of hotdogs sold at Wrigley Field: Total fixed costs = $1,200, Selling price = $16, and Variable costs = $6. Refer to Scenario 19.1. If Concession Supply increased its price by 10% and experienced only a 2% decrease in the demand for hotdogs, the demand would be

The more experience the customer has with a product, the more he or she relies on external reference prices.

Which of the following products is most likely to have an inverted C-shaped demand curve?

Duds and Suds is a bar with a country and western atmosphere. In addition to the bar, Duds and Suds has a gift shop that sells western clothing with its logo. Norman is the owner of the business and has recently enacted temporary price reductions through clearance sales, discounts, and nightly drink specials. What is Norman most likely trying to do?

A customer looking for the lowest price on a mattress without concern for the quality of the mattress or the status gained by buying and using a certain brand is a price-conscious customer.

Pricing whereby the buyer absorbs all or part of the freight costs is freight absorption pricing.

How would pricing decisions differ for a business in an oligopolistic market structure as opposed to a monopolistic market structure?

Advertisements for Suave shampoos emphasize that other shampoos may cost more but don't work any better than Suave. In this example, Suave is competing on the basis of

For most firms in the United States, demand curves are

Nonprice competition allows a company to increase its brand's unit sales through means other than changing the brand's price.

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. If BASF were to price its product in barrels from the factory, before it is loaded on the carrier, this would be an example of ____ pricing.