Question 1

Variable costs vary with changes in the level of output,whereas marginal costs do not vary as output changes.

Accepted Answer

A) True 
 B)False

Question 2

When Microsoft introduced its Zune MP3 player,many people thought it would capture the MP3 player market by pricing its product so low that a smaller competitor,like the Apple iPod,would be unable to compete.If Microsoft had used this approach it have been would be guilty of _____.

Accepted Answer

A)  predatory pricing 
B)  unfair trade practices 
C)  channel manipulation pricing 
D)  price fixing 
E)  price discrimination 
A)  predatory pricing 
B)  unfair trade practices 
C)  channel manipulation pricing 
D)  price fixing 
E)  price discrimination

Question 3

Most demand curves slope:

Accepted Answer

A)  horizontally 
B)  upward and to the right 
C)  downward and to the left 
D)  vertically 
E)  downward and to the right 
A)  horizontally 
B)  upward and to the right 
C)  downward and to the left 
D)  vertically 
E)  downward and to the right

Question 4

American Girl Doll
The American Girl catalog began as a concept to introduce today's girls to girls who lived in the past.Each historically accurate doll is carefully crafted and dressed and has books to describe her life.For example,Kristen is an 1854 pioneer girl who is growing up in Minnesota.Her story begins with her long sea voyage from Sweden.The basic doll dressed in a calico dress and striped apron plus the hardcover story of how she got to Minnesota costs $90.Six more hardback books of Kristen's life are available for $74.95.Kristen's nightgown costs $20,and a matching one for the doll owner is an additional $38.Buy both together and the price is only $50.A hand-painted wooden bed and trunk for Kristen are available for $213.Shipping costs vary with the price of the merchandise ordered.
-Refer to the American Girl Doll.American Girl is the primary seller of historically accurate dolls with accompanying books in a market where there is very little competition.It has no cash flow problems and is not interested in maximizing its sales.From this information,you should know American Girl has _____ pricing objectives.

Accepted Answer

A)  status quo 
B)  psychological 
C)  profit-oriented 
D)  sales-oriented 
E)  supply-derived 
A)  status quo 
B)  psychological 
C)  profit-oriented 
D)  sales-oriented 
E)  supply-derived

Question 5

_____ is the practice of marking up prices by 100 percent (or doubling the cost to set the selling price).

Accepted Answer

A)  Margin pricing 
B)  Keystoning 
C)  Mark-on adding 
D)  Formula doubling 
E)  Symmetrical pricing 
A)  Margin pricing 
B)  Keystoning 
C)  Mark-on adding 
D)  Formula doubling 
E)  Symmetrical pricing

Question 6

An educational toy store can buy a world globe for $30.If the store owner sells the globe for $45,what is the markup based on cost?

Accepted Answer

A)  15 percent 
B)  20 percent 
C)  25 percent 
D)  33 percent 
E)  50 percent 
A)  15 percent 
B)  20 percent 
C)  25 percent 
D)  33 percent 
E)  50 percent

Question 7

Penetration pricing means charging a relatively low price for a product as a way to reach the mass market.The low price is designed to capture a large share of a substantial market.Thus,penetration pricing:

Accepted Answer

A)  tends to be more effective in a less price-sensitive market 
B)  tempts competitors to enter the market 
C)  provides a large profit per unit sold 
D)  recoups product development costs quickly 
E)  tends to lower production costs 
A)  tends to be more effective in a less price-sensitive market 
B)  tempts competitors to enter the market 
C)  provides a large profit per unit sold 
D)  recoups product development costs quickly 
E)  tends to lower production costs

Question 8

Specialty Cakes
Imagine you're planning an after-symphony fund-raising party,and you need a life-size grand piano cake.Or,you are a developer proposing a new shopping center to a group of investors,and you want to serve a cake shaped like an architectural rendition of the center.Is this impossible? No,you just need to contact Cecilia Villaveces Cakes.She actually built a life-size grand piano for a gala in Macon,Georgia.You can expect to pay anywhere from $75 to $10,000 for one of Cecilia's artistic creations,depending on complexity of design and size.She uses only the best ingredients,and no two cakes are ever quite alike.
-Refer to Specialty Cakes.Although many factors determine the prices charged by Cecilia Villaveces Cakes,the two primary determinants are:

Accepted Answer

A)  costs of manufacturing and distribution costs 
B)  stage of the product life cycle and costs to the consumers 
C)  the demand for the good and cost to the seller 
D)  demand by the consumer and perceived quality 
E)  distribution and promotion strategies used by the cake maker 
A)  costs of manufacturing and distribution costs 
B)  stage of the product life cycle and costs to the consumers 
C)  the demand for the good and cost to the seller 
D)  demand by the consumer and perceived quality 
E)  distribution and promotion strategies used by the cake maker

Question 9

Chulo Ibsen makes and sells hand-forged wrought iron firescreens for $125 each.He has determined that his fixed costs are $8,000,and his average variable costs per firescreen are $45.What is his break-even point in dollars?

Accepted Answer

A)  $22,550 
B)  $12,500 
C)  $10,000 
D)  $8,000 
E)  $5,875 
A)  $22,550 
B)  $12,500 
C)  $10,000 
D)  $8,000 
E)  $5,875

Question 10

Specialty Cakes
Imagine you're planning an after-symphony fund-raising party,and you need a life-size grand piano cake.Or,you are a developer proposing a new shopping center to a group of investors,and you want to serve a cake shaped like an architectural rendition of the center.Is this impossible? No,you just need to contact Cecilia Villaveces Cakes.She actually built a life-size grand piano for a gala in Macon,Georgia.You can expect to pay anywhere from $75 to $10,000 for one of Cecilia's artistic creations,depending on complexity of design and size.She uses only the best ingredients,and no two cakes are ever quite alike.
-Refer to Specialty Cakes.Which of the following is the BEST example of a variable cost for Cecilia Villaveces Cakes?

Accepted Answer

A)  life insurance on Cecilia 
B)  flour and sugar 
C)  ovens used for cooking cakes 
D)  business license 
E)  interest payment to the bank 
A)  life insurance on Cecilia 
B)  flour and sugar 
C)  ovens used for cooking cakes 
D)  business license 
E)  interest payment to the bank

Question 11

American Girl Doll
The American Girl catalog began as a concept to introduce today's girls to girls who lived in the past.Each historically accurate doll is carefully crafted and dressed and has books to describe her life.For example,Kristen is an 1854 pioneer girl who is growing up in Minnesota.Her story begins with her long sea voyage from Sweden.The basic doll dressed in a calico dress and striped apron plus the hardcover story of how she got to Minnesota costs $90.Six more hardback books of Kristen's life are available for $74.95.Kristen's nightgown costs $20,and a matching one for the doll owner is an additional $38.Buy both together and the price is only $50.A hand-painted wooden bed and trunk for Kristen are available for $213.Shipping costs vary with the price of the merchandise ordered.
-Refer to the American Girl Doll.Based on the information in the narrative above,which of the following factors is most likely to affect the elasticity of demand for the doll?

Accepted Answer

A)  the absence of substitutes 
B)  the existence of complementary products 
C)  the price relative to purchasing power 
D)  product durability 
E)  a variety of alternative uses for the product 
A)  the absence of substitutes 
B)  the existence of complementary products 
C)  the price relative to purchasing power 
D)  product durability 
E)  a variety of alternative uses for the product

Question 12

A company using market share pricing has a _____ pricing objective.

Accepted Answer

A)  profit-oriented 
B)  sales-oriented 
C)  demand-oriented 
D)  supply-oriented 
E)  status quo 
A)  profit-oriented 
B)  sales-oriented 
C)  demand-oriented 
D)  supply-oriented 
E)  status quo

Question 13

During the hot summer months or the week before a new class starts if there is still space available,the Nick Price golf school in Orlando,Florida offers a 25 percent reduction to get golfers during the off-season or those making a last-minute decision.This is an example of pricing strategy used as a(n):

Accepted Answer

A)  distribution tool 
B)  price enhancer 
C)  product strategy 
D)  direct sales tool 
E)  promotion strategy 
A)  distribution tool 
B)  price enhancer 
C)  product strategy 
D)  direct sales tool 
E)  promotion strategy

Question 14

Which of the following is most likely to be a variable cost for an Internet retailer that sells spices,herbs,and seasonings to consumers?

Accepted Answer

A)  annual lease on mixer used to blend seasonings 
B)  executive salaries 
C)  rent for building where spices and herbs are repackaged for consumers 
D)  workers' insurance 
E)  postage for shipping spices and herbs 
A)  annual lease on mixer used to blend seasonings 
B)  executive salaries 
C)  rent for building where spices and herbs are repackaged for consumers 
D)  workers' insurance 
E)  postage for shipping spices and herbs

Question 15

Firms that price their products solely on the basis of costs are adhering to the marketing concept.

Accepted Answer

A) True 
 B)False

Question 16

Pharmacies are a new addition to Sam's Clubs.They could exert a greater influence on the marketplace for prescription drugs than their newness indicates.Sam's has a stated philosophy of marking up merchandise a maximum of 14 percent.When that philosophy is applied to prescription drugs,especially generics,warehouse club prices can be dramatically lower than those of conventional drugstores,supermarkets,or discount store pharmacies.Sam's is using a _____ strategy to convince consumers to use its pharmacies rather than its competitors.

Accepted Answer

A)  penetration pricing 
B)  price-insensitive demand 
C)  price-skimming 
D)  price elasticity 
E)  cost bundling 
A)  penetration pricing 
B)  price-insensitive demand 
C)  price-skimming 
D)  price elasticity 
E)  cost bundling

Question 17

A firm charging a price identical to or very close to the competition's price is using a _____ strategy.

Accepted Answer

A)  differentiation pricing 
B)  penetration pricing 
C)  preemptive pricing 
D)  status quo pricing 
E)  leader pricing 
A)  differentiation pricing 
B)  penetration pricing 
C)  preemptive pricing 
D)  status quo pricing 
E)  leader pricing

Question 18

State laws that put a lower limit on wholesale and retail prices are called _____.In states that have these laws,selling below cost is illegal.

Accepted Answer

A)  unfair trade practice acts 
B)  price floor laws 
C)  protectionism acts 
D)  transparency laws 
E)  price edicts 
A)  unfair trade practice acts 
B)  price floor laws 
C)  protectionism acts 
D)  transparency laws 
E)  price edicts

Question 19

Mitch owns a pet boarding kennel.The monthly payment on the land he purchased for his kennel,the mortgage on his small office building,and his business license are all examples of _____ costs.

Accepted Answer

A)  marginal 
B)  variable 
C)  fixed 
D)  promotional 
E)  demand 
A)  marginal 
B)  variable 
C)  fixed 
D)  promotional 
E)  demand

Question 20

An organization is using _____ when it sets its prices so that total revenue is as large as possible relative to total costs.

Accepted Answer

A)  profit maximization 
B)  market share pricing 
C)  demand-oriented pricing 
D)  sales maximization 
E)  status quo pricing 
A)  profit maximization 
B)  market share pricing 
C)  demand-oriented pricing 
D)  sales maximization 
E)  status quo pricing

Variable costs vary with changes in the level of output,whereas marginal costs do not vary as output changes.

When Microsoft introduced its Zune MP3 player,many people thought it would capture the MP3 player market by pricing its product so low that a smaller competitor,like the Apple iPod,would be unable to compete.If Microsoft had used this approach it have been would be guilty of _____.

Most demand curves slope:

_____ is the practice of marking up prices by 100 percent (or doubling the cost to set the selling price).

An educational toy store can buy a world globe for $30.If the store owner sells the globe for $45,what is the markup based on cost?

Penetration pricing means charging a relatively low price for a product as a way to reach the mass market.The low price is designed to capture a large share of a substantial market.Thus,penetration pricing:

Chulo Ibsen makes and sells hand-forged wrought iron firescreens for $125 each.He has determined that his fixed costs are $8,000,and his average variable costs per firescreen are $45.What is his break-even point in dollars?

A company using market share pricing has a _____ pricing objective.

Which of the following is most likely to be a variable cost for an Internet retailer that sells spices,herbs,and seasonings to consumers?

Firms that price their products solely on the basis of costs are adhering to the marketing concept.

A firm charging a price identical to or very close to the competition's price is using a _____ strategy.

State laws that put a lower limit on wholesale and retail prices are called _____.In states that have these laws,selling below cost is illegal.

Mitch owns a pet boarding kennel.The monthly payment on the land he purchased for his kennel,the mortgage on his small office building,and his business license are all examples of _____ costs.

An organization is using _____ when it sets its prices so that total revenue is as large as possible relative to total costs.

An Overview of Marketing

Strategic Planning for Competitive Advantage

Ethics & Social Responsibility

The Marketing Environment

Developing a Global Vision

Consumer Decision Making

Business Marketing

Segmenting and Targeting Markets

Decision Support Systems and Marketing Research

Product Concepts

Developing and Managing Products

Marketing Channels and Supply Chain Management

Retailing

Marketing Communications and Advertising

Public Relations, Sales Promotion, and Personal Selling

Filters

Exam 16: Pricing Concepts

Variable costs vary with changes in the level of output,whereas marginal costs do not vary as output changes.

When Microsoft introduced its Zune MP3 player,many people thought it would capture the MP3 player market by pricing its product so low that a smaller competitor,like the Apple iPod,would be unable to compete.If Microsoft had used this approach it have been would be guilty of _____.

Most demand curves slope:

_____ is the practice of marking up prices by 100 percent (or doubling the cost to set the selling price).

An educational toy store can buy a world globe for $30.If the store owner sells the globe for $45,what is the markup based on cost?

Penetration pricing means charging a relatively low price for a product as a way to reach the mass market.The low price is designed to capture a large share of a substantial market.Thus,penetration pricing:

Chulo Ibsen makes and sells hand-forged wrought iron firescreens for $125 each.He has determined that his fixed costs are $8,000,and his average variable costs per firescreen are $45.What is his break-even point in dollars?

A company using market share pricing has a _____ pricing objective.

Which of the following is most likely to be a variable cost for an Internet retailer that sells spices,herbs,and seasonings to consumers?

Firms that price their products solely on the basis of costs are adhering to the marketing concept.

A firm charging a price identical to or very close to the competition's price is using a _____ strategy.

State laws that put a lower limit on wholesale and retail prices are called _____.In states that have these laws,selling below cost is illegal.

Mitch owns a pet boarding kennel.The monthly payment on the land he purchased for his kennel,the mortgage on his small office building,and his business license are all examples of _____ costs.

An organization is using _____ when it sets its prices so that total revenue is as large as possible relative to total costs.

An Overview of Marketing

Strategic Planning for Competitive Advantage

Ethics & Social Responsibility

The Marketing Environment

Developing a Global Vision

Consumer Decision Making

Business Marketing

Segmenting and Targeting Markets

Decision Support Systems and Marketing Research

Product Concepts

Developing and Managing Products

Marketing Channels and Supply Chain Management

Retailing

Marketing Communications and Advertising

Public Relations, Sales Promotion, and Personal Selling

Filters