Question 1

_____ cost is the change in total costs associated with a one-unit change in output.

Accepted Answer

A)  Variable 
B)  Intermittent 
C)  Elastic 
D)  Marginal 
E)  Flex 
A)  Variable 
B)  Intermittent 
C)  Elastic 
D)  Marginal 
E)  Flex

Question 2

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.Samsung recently introduced its Instinct cellular phone,apparently to compete directly with the iPhone.If Samsung checked the price of the iPhone at the Apple Store and AT&T locations and then set the price of the Instinct to match the iPhone's price,it would be using a _____ pricing approach.

Accepted Answer

A)  bracketing 
B)  penetration 
C)  status quo 
D)  retain maintenance 
E)  skimming 
A)  bracketing 
B)  penetration 
C)  status quo 
D)  retain maintenance 
E)  skimming

Question 3

Procter & Gamble dropped the price of Pringles Potato Chips in the Southeast due to price competition and consumer demand.As a result of the price reduction,Procter & Gamble increased unit sales and earnings by 10 percent due to:

Accepted Answer

A)  reduction in supply 
B)  increases in both supply and demand 
C)  demand being elastic 
D)  demand being inelastic 
E)  market share fluctuations 
A)  reduction in supply 
B)  increases in both supply and demand 
C)  demand being elastic 
D)  demand being inelastic 
E)  market share fluctuations

Question 4

All pricing objectives have trade-offs that managers must weigh.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following statements about the Internet is true?

Accepted Answer

A)  The Internet has shifted all shopping power to consumers. 
B)  Consumer reviews tend to be equal in quality. 
C)  Business-to-business auctions on the Internet are likely to be more important than consumer auctions in the future. 
D)  Fraud is not a problem on the Internet. 
E)  Extranets are programs that search the Internet for the best price for a particular product. 
A)  The Internet has shifted all shopping power to consumers. 
B)  Consumer reviews tend to be equal in quality. 
C)  Business-to-business auctions on the Internet are likely to be more important than consumer auctions in the future. 
D)  Fraud is not a problem on the Internet. 
E)  Extranets are programs that search the Internet for the best price for a particular product.

Question 6

Smelly Fruit
At first glance there is little to like about the durian.The durian is a fruit popular in Thailand that is spiky outside and stinky on the inside.When confronted with the durian for the first time,the Wall Street Journal recently reported that westerners often describe its distinctive sulphurous smell with words like stinky socks and manure.However,the durian is so popular in Thailand that one variety of the durian fruit,called the Kan Yao,has been selling for as high as $200.Even at that price,supply of the Kan Yao cannot keep up with demand.There are approximately 30 varieties of the durian grown in Thailand,with the most plentiful selling in the $15 range.The yellow flesh of the durian,the part you eat,has very powerful smell,but possesses a sweet,nutty taste that Thais cannot seem to get enough of at any price.
-Refer to Smelly Fruit.At $200 per Kan Yao demand for the fruit appears to be higher than supply.Suppose at a price of $225,the amount demanded exactly meets the amount farmers are willing and able to supply.In this case the $225 price would be considered the _____ price.

Accepted Answer

A)  Price equilibrium 
B)  Sales maximization 
C)  Profit maximization 
D)  ROI maximization 
E)  Yield management 
A)  Price equilibrium 
B)  Sales maximization 
C)  Profit maximization 
D)  ROI maximization 
E)  Yield management

Question 7

Today's firms must develop specific,measurable,and attainable pricing objectives if they hope to survive in highly competitive markets.

Accepted Answer

A) True 
 B)False

Question 8

If demand for milk is inelastic,consumers will not change their purchasing habits greatly when the price of milk changes.

Accepted Answer

A) True 
 B)False

Question 9

_____ is the extra revenue associated with selling an additional unit of output.

Accepted Answer

A)  Average revenue 
B)  Marginal revenue 
C)  Marginal cost 
D)  Net profit 
E)  Average variable cost 
A)  Average revenue 
B)  Marginal revenue 
C)  Marginal cost 
D)  Net profit 
E)  Average variable cost

Question 10

If a company's pricing objective is to meet the competition or to maintain existing prices,it is using _____ pricing.

Accepted Answer

A)  head-on 
B)  target return on investment 
C)  status quo 
D)  market share 
E)  demand-oriented 
A)  head-on 
B)  target return on investment 
C)  status quo 
D)  market share 
E)  demand-oriented

Question 11

The owner of specialty kitchen retail store wants to determine what price she should put on a set of mixing bowls.They cost her $7.She desires a markup of 30 percent based on selling price.Which of the following is closest to the price she should charge her customers?

Accepted Answer

A)  $19 
B)  $12 
C)  $15 
D)  $10 
E)  $18 
A)  $19 
B)  $12 
C)  $15 
D)  $10 
E)  $18

Question 12

Name two advantages and two disadvantages associated with the use of break-even analysis.

Accepted Answer

Advantages of using break-even analysis

Question 13

The DCS Stainless Steel Gas Grill for outside cooking costs $3,995.The market for a grill that could easily replace a kitchen range is limited even though a lot of people have seen articles about this grill in cooking magazines and in the cooking section of newspapers.There is no potential competitor for this grill.The _____ strategy is probably best.

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 14

Once he compiles information on pricing objectives,market demand,quantity supplied,and the price elasticity of demand,the owner/operator of a home cleaning service will be ready to determine the optimal price for a new service offering.

Accepted Answer

A) True 
 B)False

Question 15

Revenue:

Accepted Answer

A)  equals quantity sold times profit margin 
B)  equals price minus costs 
C)  equals return on investment 
D)  is synonymous with profit 
E)  equals price of goods times quantity sold 
A)  equals quantity sold times profit margin 
B)  equals price minus costs 
C)  equals return on investment 
D)  is synonymous with profit 
E)  equals price of goods times quantity sold

Question 16

Adequate distribution for a new product is often obtained by reducing the size of the profit margin for its resellers.

Accepted Answer

A) True 
 B)False

Question 17

At the end of the summer,Howard Nursery reduced the price on all of its plants,fertilizer,and potting soil by 50 percent in order to liquidate this inventory.What type of pricing strategy is being used in this example?

Accepted Answer

A)  supply oriented 
B)  sales maximization 
C)  target return on investment 
D)  satisfactory profit 
E)  profit maximization 
A)  supply oriented 
B)  sales maximization 
C)  target return on investment 
D)  satisfactory profit 
E)  profit maximization

Question 18

A shortage of blood for transfusions for injured animals has resulted in the introduction of a synthesized product called Oxyglobin,which can be used effectively as a blood replacement.The manufacturer of the product has put a high price on the product in order to recoup its research and development costs.The manufacturer of Oxyglobin is using a _____ policy.

Accepted Answer

A)  price-banding 
B)  penetration pricing 
C)  price-lining 
D)  bundling costs 
E)  price-skimming 
A)  price-banding 
B)  penetration pricing 
C)  price-lining 
D)  bundling costs 
E)  price-skimming

Question 19

At Wal-Mart,Randi saw a bag of daffodil flower bulbs and a box of plant fertilizer.The items,which were sold together,retailed at $28.50,but were marked down to $19.99.The retailer sold one at the $28.50 price and five at the $19.99.The retailer's revenue is:

Accepted Answer

A)  $8.51 
B)  $19.99 
C)  $28.50 
D)  $128.45 
E)  $171.00 
A)  $8.51 
B)  $19.99 
C)  $28.50 
D)  $128.45 
E)  $171.00

Question 20

When a retailer offers a price-matching guarantee,it is signaling to the target market that it is positioned as a low-price dealer.

Accepted Answer

A) True 
 B)False

_____ cost is the change in total costs associated with a one-unit change in output.

Procter & Gamble dropped the price of Pringles Potato Chips in the Southeast due to price competition and consumer demand.As a result of the price reduction,Procter & Gamble increased unit sales and earnings by 10 percent due to:

All pricing objectives have trade-offs that managers must weigh.

Which of the following statements about the Internet is true?

Today's firms must develop specific,measurable,and attainable pricing objectives if they hope to survive in highly competitive markets.

If demand for milk is inelastic,consumers will not change their purchasing habits greatly when the price of milk changes.

_____ is the extra revenue associated with selling an additional unit of output.

If a company's pricing objective is to meet the competition or to maintain existing prices,it is using _____ pricing.

The owner of specialty kitchen retail store wants to determine what price she should put on a set of mixing bowls.They cost her $7.She desires a markup of 30 percent based on selling price.Which of the following is closest to the price she should charge her customers?

Name two advantages and two disadvantages associated with the use of break-even analysis.

Once he compiles information on pricing objectives,market demand,quantity supplied,and the price elasticity of demand,the owner/operator of a home cleaning service will be ready to determine the optimal price for a new service offering.

Revenue:

Adequate distribution for a new product is often obtained by reducing the size of the profit margin for its resellers.

At the end of the summer,Howard Nursery reduced the price on all of its plants,fertilizer,and potting soil by 50 percent in order to liquidate this inventory.What type of pricing strategy is being used in this example?

At Wal-Mart,Randi saw a bag of daffodil flower bulbs and a box of plant fertilizer.The items,which were sold together,retailed at $28.50,but were marked down to $19.99.The retailer sold one at the $28.50 price and five at the $19.99.The retailer's revenue is:

When a retailer offers a price-matching guarantee,it is signaling to the target market that it is positioned as a low-price dealer.

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

_____ cost is the change in total costs associated with a one-unit change in output.

Procter & Gamble dropped the price of Pringles Potato Chips in the Southeast due to price competition and consumer demand.As a result of the price reduction,Procter & Gamble increased unit sales and earnings by 10 percent due to:

All pricing objectives have trade-offs that managers must weigh.

Which of the following statements about the Internet is true?

Today's firms must develop specific,measurable,and attainable pricing objectives if they hope to survive in highly competitive markets.

If demand for milk is inelastic,consumers will not change their purchasing habits greatly when the price of milk changes.

_____ is the extra revenue associated with selling an additional unit of output.

If a company's pricing objective is to meet the competition or to maintain existing prices,it is using _____ pricing.

The owner of specialty kitchen retail store wants to determine what price she should put on a set of mixing bowls.They cost her $7.She desires a markup of 30 percent based on selling price.Which of the following is closest to the price she should charge her customers?

Name two advantages and two disadvantages associated with the use of break-even analysis.

Once he compiles information on pricing objectives,market demand,quantity supplied,and the price elasticity of demand,the owner/operator of a home cleaning service will be ready to determine the optimal price for a new service offering.

Revenue:

Adequate distribution for a new product is often obtained by reducing the size of the profit margin for its resellers.

At the end of the summer,Howard Nursery reduced the price on all of its plants,fertilizer,and potting soil by 50 percent in order to liquidate this inventory.What type of pricing strategy is being used in this example?

At Wal-Mart,Randi saw a bag of daffodil flower bulbs and a box of plant fertilizer.The items,which were sold together,retailed at $28.50,but were marked down to $19.99.The retailer sold one at the $28.50 price and five at the $19.99.The retailer's revenue is:

When a retailer offers a price-matching guarantee,it is signaling to the target market that it is positioned as a low-price dealer.

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