Question 1

Many consumers,especially when faced with an uncertain purchase decision,think that a high price:

Accepted Answer

A)  is a signal of quality 
B)  is an indication that consumers are being ripped off 
C)  will always lead to major price discounts to wholesalers and retailers that distribute it 
D)  is a sign of the company's overall market share 
E)  indicates that the brand was slipping into the decline stage of the product life cycle but has had a sudden resurgence of growth 
A)  is a signal of quality 
B)  is an indication that consumers are being ripped off 
C)  will always lead to major price discounts to wholesalers and retailers that distribute it 
D)  is a sign of the company's overall market share 
E)  indicates that the brand was slipping into the decline stage of the product life cycle but has had a sudden resurgence of growth

Question 2

One disadvantage of using a penetration pricing policy is that the high unit profit margins will attract potential competitors into production of similar products.

Accepted Answer

A) True 
 B)False

Question 3

The price-skimming strategy is sometimes called a "market-plus" approach to pricing because it denotes a high price relative to the prices of competing products.This strategy works best when:

Accepted Answer

A)  competition is abundant 
B)  revenues are equal to expenses 
C)  supply is greater than demand 
D)  production capacity is large and flexible 
E)  demand is greater than supply 
A)  competition is abundant 
B)  revenues are equal to expenses 
C)  supply is greater than demand 
D)  production capacity is large and flexible 
E)  demand is greater than supply

Question 4

_____ use complex mathematical software to profitably fill unused capacity.

Accepted Answer

A)  Yield management systems 
B)  Capacity correlation systems 
C)  Service forecasting tools 
D)  Service management systems 
E)  Capacity management software 
A)  Yield management systems 
B)  Capacity correlation systems 
C)  Service forecasting tools 
D)  Service management systems 
E)  Capacity management software

Question 5

All of the following factors directly affect the elasticity of demand EXCEPT:

Accepted Answer

A)  other uses of a product 
B)  inputs needed to manufacture the product 
C)  availability of substitute goods 
D)  price relative to a consumer's purchasing power 
E)  product durability 
A)  other uses of a product 
B)  inputs needed to manufacture the product 
C)  availability of substitute goods 
D)  price relative to a consumer's purchasing power 
E)  product durability

Question 6

The market for turkey products is large.If a major producer of turkeys were to introduce a boneless fresh turkey wrapped around savory dressing,most of the large market for this new product would be aware of its existence.The market is price sensitive,and there is some potential competition.The appropriate strategy would be:

Accepted Answer

A)  price skimming 
B)  penetration pricing 
C)  status quo 
D)  cost bundling 
E)  price lining 
A)  price skimming 
B)  penetration pricing 
C)  status quo 
D)  cost bundling 
E)  price lining

Question 7

Some pricing decisions are subject to government regulation.Name and define three pricing practices that are illegal.

Accepted Answer

UNFAIR TRADE PRACTICES occur when firms

Question 8

Kroger supermarkets will place well-known brands on the shelves at high prices while offering their own Kroger brand at lower prices.This practice is an example of:

Accepted Answer

A)  illegal pricing 
B)  selling against the brand 
C)  price pressurization 
D)  brand cutting 
E)  private-label cannibalization 
A)  illegal pricing 
B)  selling against the brand 
C)  price pressurization 
D)  brand cutting 
E)  private-label cannibalization

Question 9

Ceylon Express sells bottled pasteurized tea to retailers.It has the following revenues and costs:
 
What is the annual break-even point in units for the company?

Accepted Answer

A)  50,000 
B)  250,000 
C)  100,000 
D)  166,667 
E)  500,000 
A)  50,000 
B)  250,000 
C)  100,000 
D)  166,667 
E)  500,000

Question 10

The first step in setting the right price for a new product is to estimate demand,costs,and profits.

Accepted Answer

A) True 
 B)False

Question 11

Tesla Motors
"Going green" doesn't have to be boring.The Tesla Roadster Sport is an electric car that goes from 0 to 60 in four seconds and drives more like a race car than an environmentally-friendly ride.But that level of performance will set you back $128,500.As of 2009,Silicon Valley-based Tesla Motors,Inc.was the only company offering highway-compatible electric cars.Most Roadster Sport buyers are car enthusiasts and are buying them for the "fun toy" aspect of having an electric car rather than for environmental reasons.
-Refer to Tesla Motors.If total fixed costs are $23,400,000 and the average variable costs is $50,500,how many Roadsters must Tesla sell to break-even?

Accepted Answer

A)  130 
B)  182 
C)  250 
D)  300 
E)  463 
A)  130 
B)  182 
C)  250 
D)  300 
E)  463

Question 12

Which of the following statements describes a limitation associated with break-even analysis?

Accepted Answer

A)  It is sometimes difficult to ascertain whether a cost is fixed or variable. 
B)  It requires the calculation of marginal revenue. 
C)  It strictly considers demand. 
D)  It assumes variable cost per item,which is difficult to calculate. 
E)  It can only be expressed as a break-even point in dollar amounts. 
A)  It is sometimes difficult to ascertain whether a cost is fixed or variable. 
B)  It requires the calculation of marginal revenue. 
C)  It strictly considers demand. 
D)  It assumes variable cost per item,which is difficult to calculate. 
E)  It can only be expressed as a break-even point in dollar amounts.

Question 13

Apple iPhone
Apple Inc.iPhone went on sale on June 29,2007.Apple's loyal and enthusiastic customer base is known for rushing to purchase its new products and the iPhone enjoyed a tremendous amount of "buzz" before its introduction.As expected,the iPhone entered the market at what many believed to be a high price ($599).However,within weeks the price was reduced to $399.By the end of 2007 over 8 million iPhones had sold in the U.S.marketplace.By most,if not all measures,the original iPhone was a huge success for Apple and it exclusive U.S.carrier AT&T.
On July 11ᵗʰ,2008,Apple Inc.released the iPhone 3G,which it advertised as twice as fast as the original iPhone for half the cost.However,in order to obtain an iPhone at the new price of $199,buyers had to agree to a two-year service contract with AT&T.This allows iPhone users to receive phone calls and email,and search the web on the same device.A single charge of $59.99 from AT&T included 450 minutes of cellular calls,with free nights and weekend minutes,unlimited data,visual voicemail,200 text messages,rollover minutes,and unlimited mobile-to-mobile service within the AT&T network.This approach succeeded and over a million iPhone 3Gs were sold during the introductory weekend.
-Refer to Apple iPhone.Best Buy also carries the iPhone.If Best Buy,AT&T,and Apple meet to agree on a price for the iPhone,it could be said that _____ has occurred.

Accepted Answer

A)  price fixing 
B)  retail price maintenance 
C)  price discrimination 
D)  penetration pricing 
E)  price skimming 
A)  price fixing 
B)  retail price maintenance 
C)  price discrimination 
D)  penetration pricing 
E)  price skimming

Question 14

As products enter the growth stage of the product life cycle,prices generally begin to stabilize.

Accepted Answer

A) True 
 B)False

Question 15

The typical break-even model assumes a given fixed cost and a:

Accepted Answer

A)  variable per unit cost 
B)  constant inventory turnover 
C)  markup cost attained through keystoning 
D)  constant production schedule 
E)  constant average variable cost 
A)  variable per unit cost 
B)  constant inventory turnover 
C)  markup cost attained through keystoning 
D)  constant production schedule 
E)  constant average variable cost

Question 16

When Delta Airlines raises or lowers its prices on its Atlanta to Chicago route other airlines tend to make the same changes in their pricing.This is an example of _____ pricing.

Accepted Answer

A)  status quo 
B)  target return 
C)  market share 
D)  predatory 
E)  cost-plus 
A)  status quo 
B)  target return 
C)  market share 
D)  predatory 
E)  cost-plus

Question 17

What is marginal revenue? Based on the provided schedule from the Chesapeake Bay Swing Company,at which quantity should Chesapeake Bay stop producing additional swings?

Accepted Answer

Marginal revenue is the extra revenue as

Question 18

Critics claim bank ATMs take advantage of the _____ of customers who suffer a poverty of time and have a strong need for convenience.

Accepted Answer

A)  elasticity of demand 
B)  inelastic demand schedule 
C)  unitary supply and demand 
D)  ROI characteristics 
E)  supply characteristics 
A)  elasticity of demand 
B)  inelastic demand schedule 
C)  unitary supply and demand 
D)  ROI characteristics 
E)  supply characteristics

Question 19

Thompson Pool is known for quality pool installations,excellent customer service,and reasonable prices.If you want to have a Thompson pool you will have to wait about six months due to demand for their product.While Thompson could probably price their product higher,given the demand,they don't.Instead,they set price so that they earn a reasonable level of profits.This company seems to base its pricing policy on:

Accepted Answer

A)  profit maximization 
B)  earning satisfactory profits 
C)  creating retained earnings 
D)  making the most money as possible 
E)  decreasing consumer demand 
A)  profit maximization 
B)  earning satisfactory profits 
C)  creating retained earnings 
D)  making the most money as possible 
E)  decreasing consumer demand

Question 20

As a product moves through its life cycle,the demand for the product and the competitive conditions tend to change.For each stage in the product life cycle,discuss pricing strategies appropriate for that stage.

Accepted Answer

INTRODUCTION.Generally,prices are set hi

Many consumers,especially when faced with an uncertain purchase decision,think that a high price:

One disadvantage of using a penetration pricing policy is that the high unit profit margins will attract potential competitors into production of similar products.

The price-skimming strategy is sometimes called a "market-plus" approach to pricing because it denotes a high price relative to the prices of competing products.This strategy works best when:

_____ use complex mathematical software to profitably fill unused capacity.

All of the following factors directly affect the elasticity of demand EXCEPT:

Some pricing decisions are subject to government regulation.Name and define three pricing practices that are illegal.

Kroger supermarkets will place well-known brands on the shelves at high prices while offering their own Kroger brand at lower prices.This practice is an example of:

Ceylon Express sells bottled pasteurized tea to retailers.It has the following revenues and costs: What is the annual break-even point in units for the company?

The first step in setting the right price for a new product is to estimate demand,costs,and profits.

Which of the following statements describes a limitation associated with break-even analysis?

As products enter the growth stage of the product life cycle,prices generally begin to stabilize.

The typical break-even model assumes a given fixed cost and a:

When Delta Airlines raises or lowers its prices on its Atlanta to Chicago route other airlines tend to make the same changes in their pricing.This is an example of _____ pricing.

What is marginal revenue? Based on the provided schedule from the Chesapeake Bay Swing Company,at which quantity should Chesapeake Bay stop producing additional swings?

Critics claim bank ATMs take advantage of the _____ of customers who suffer a poverty of time and have a strong need for convenience.

As a product moves through its life cycle,the demand for the product and the competitive conditions tend to change.For each stage in the product life cycle,discuss pricing strategies appropriate for that stage.

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

Many consumers,especially when faced with an uncertain purchase decision,think that a high price:

One disadvantage of using a penetration pricing policy is that the high unit profit margins will attract potential competitors into production of similar products.

The price-skimming strategy is sometimes called a "market-plus" approach to pricing because it denotes a high price relative to the prices of competing products.This strategy works best when:

_____ use complex mathematical software to profitably fill unused capacity.

All of the following factors directly affect the elasticity of demand EXCEPT:

Some pricing decisions are subject to government regulation.Name and define three pricing practices that are illegal.

Kroger supermarkets will place well-known brands on the shelves at high prices while offering their own Kroger brand at lower prices.This practice is an example of:

Ceylon Express sells bottled pasteurized tea to retailers.It has the following revenues and costs: What is the annual break-even point in units for the company?

The first step in setting the right price for a new product is to estimate demand,costs,and profits.

Which of the following statements describes a limitation associated with break-even analysis?

As products enter the growth stage of the product life cycle,prices generally begin to stabilize.

The typical break-even model assumes a given fixed cost and a:

When Delta Airlines raises or lowers its prices on its Atlanta to Chicago route other airlines tend to make the same changes in their pricing.This is an example of _____ pricing.

What is marginal revenue? Based on the provided schedule from the Chesapeake Bay Swing Company,at which quantity should Chesapeake Bay stop producing additional swings?

Critics claim bank ATMs take advantage of the _____ of customers who suffer a poverty of time and have a strong need for convenience.

As a product moves through its life cycle,the demand for the product and the competitive conditions tend to change.For each stage in the product life cycle,discuss pricing strategies appropriate for that stage.

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