Question 1

What are the six major steps involved in setting prices?

Accepted Answer

Step 1: Identify pricing objectives and constraints.Step 2: Determine price elasticity of demand.Step 3: Perform break-even analysis.Step 4: Select an approximate price level.Step 5: Set list or quoted price.Step 6: Make special adjustments to list or quoted price.

Question 2

If competitive market circumstances are such that there is almost no price competition,no product differentiation,and the only advertising informs prospects that the product is available,then the competitive market in this industry must be

Accepted Answer

A) a pure monopoly. 
B) pure competition. 
C) an oligopoly. 
D) monopolistic competition. 
E) monopolistic oligopoly. 
A) a pure monopoly. 
B) pure competition. 
C) an oligopoly. 
D) monopolistic competition. 
E) monopolistic oligopoly. B

Question 3

Tara is enrolled for spring semester at college.The tuition is $6,000,but she has a scholarship for $1,000 as well as a work-study grant of $1,500.The health fees and student activity fees are $150 for the semester.What is the final price that Tara will pay for the spring semester?

Accepted Answer

A) $2,500 
B) $2,650 
C) $3,150 
D) $3,650 
E) $6,150 
A) $2,500 
B) $2,650 
C) $3,150 
D) $3,650 
E) $6,150 D

Question 4

Many cosmetology schools allow their advanced students to style hair for "real-world" clients for a reduced fee.The students benefit from the experience,the clients get a less expensive haircut,and the school is able to provide students with additional training without it costing anything;in fact,they even profit from it.This is an example of

Accepted Answer

A) value pricing. 
B) societal pricing. 
C) revenue sharing. 
D) barter. 
E) cost-assist pricing. 
A) value pricing. 
B) societal pricing. 
C) revenue sharing. 
D) barter. 
E) cost-assist pricing.

Question 5

Which of the following statements regarding pricing constraints is most accurate?

Accepted Answer

A) Generally,the greater the demand for a product,the higher the price that can be set. 
B) At the corporate level,when setting pricing constraints,a firm must disregard current conditions in the marketplace because they are too temporal for long-term planning. 
C) Pricing constraints must always be set,but they are rarely enforced. 
D) It is possible to create pricing constraints with the greatest range possible in order to anticipate any and all changes in the marketing environment. 
E) Even if a firm is trying to satisfy its obligations to its customers and society in general,it should ignore setting pricing constraints. 
A) Generally,the greater the demand for a product,the higher the price that can be set. 
B) At the corporate level,when setting pricing constraints,a firm must disregard current conditions in the marketplace because they are too temporal for long-term planning. 
C) Pricing constraints must always be set,but they are rarely enforced. 
D) It is possible to create pricing constraints with the greatest range possible in order to anticipate any and all changes in the marketing environment. 
E) Even if a firm is trying to satisfy its obligations to its customers and society in general,it should ignore setting pricing constraints.

Question 6

List four key factors used to estimate demand.

Accepted Answer

Of course,price is one factor.Economists

Question 7

Total revenue refers to

Accepted Answer

A) the profit made from selling a product or service. 
B) the net gain in sales if the unit price is lowered. 
C) the least number of units sold needed to cover product,distribution,and promotional costs. 
D) the amount at which marginal costs exceed fixed costs. 
E) the total money received from the sale of a product. 
A) the profit made from selling a product or service. 
B) the net gain in sales if the unit price is lowered. 
C) the least number of units sold needed to cover product,distribution,and promotional costs. 
D) the amount at which marginal costs exceed fixed costs. 
E) the total money received from the sale of a product.

Question 8

Pricing objectives involve

Accepted Answer

A) reconciling the prices charged by an organization to the values set forth in its business mission. 
B) taking specific steps to capitalize on an organization's internal strengths as they apply to price. 
C) specifying the role of price in an organization's marketing and strategic plans. 
D) taking specific steps to compensate for an organization's weaknesses as they apply to price. 
E) subjectively setting intrinsic values to all products and services offered by an organization. 
A) reconciling the prices charged by an organization to the values set forth in its business mission. 
B) taking specific steps to capitalize on an organization's internal strengths as they apply to price. 
C) specifying the role of price in an organization's marketing and strategic plans. 
D) taking specific steps to compensate for an organization's weaknesses as they apply to price. 
E) subjectively setting intrinsic values to all products and services offered by an organization.

Question 9

Figure 13-7
  
-In the break-even chart in Figure 13-7 above,point A identifies the firm's ________ point.

Accepted Answer

A) loss 
B) price 
C) margin 
D) profit 
E) break-even 
A) loss 
B) price 
C) margin 
D) profit 
E) break-even

Question 10

A target return profit objective implies that a company chooses to

Accepted Answer

A) set targets whose performance can be measured quickly. 
B) give up immediate profit in exchange for achieving a higher market share in hopes of penetrating competitive markets. 
C) set a profit goal that is often determined by its board of directors. 
D) reduce investment in any further market or product research. 
E) set prices based on return on sales. 
A) set targets whose performance can be measured quickly. 
B) give up immediate profit in exchange for achieving a higher market share in hopes of penetrating competitive markets. 
C) set a profit goal that is often determined by its board of directors. 
D) reduce investment in any further market or product research. 
E) set prices based on return on sales.

Question 11

Which of the following statements is most accurate?

Accepted Answer

A) For some products,price influences the perception of overall quality,and ultimately value,to consumers. 
B) A consumer's view of a product's value depends almost entirely on external assessments of quality. 
C) A consumer's view of value is a function of his or her education and income. 
D) Price plays only a small part in a consumer's perceived value of a product or service. 
E) Price plays a large role in assessing value but a very minor role in assessing quality. 
A) For some products,price influences the perception of overall quality,and ultimately value,to consumers. 
B) A consumer's view of a product's value depends almost entirely on external assessments of quality. 
C) A consumer's view of value is a function of his or her education and income. 
D) Price plays only a small part in a consumer's perceived value of a product or service. 
E) Price plays a large role in assessing value but a very minor role in assessing quality.

Question 12

A negative aspect of selecting unit volume as a pricing objective is that

Accepted Answer

A) production often cannot keep up with demand. 
B) there are increased carrying costs with extensive inventories. 
C) if price reductions are used to achieve volume objectives,it can sometimes come at the expense of profits. 
D) it can create competition between divisions within the organization itself,causing conflicts over the allocation of resources. 
E) it always positively correlates with a sales revenue objective. 
A) production often cannot keep up with demand. 
B) there are increased carrying costs with extensive inventories. 
C) if price reductions are used to achieve volume objectives,it can sometimes come at the expense of profits. 
D) it can create competition between divisions within the organization itself,causing conflicts over the allocation of resources. 
E) it always positively correlates with a sales revenue objective.

Question 13

Assuming there is no change in a product's price or the quantity demanded,if a business owner wants to increase her advertising expenses by $500 monthly,this would cause total costs to ________ and the break-even quantity to

Accepted Answer

A) decrease;stay the same. 
B) increase;increase. 
C) decrease;increase. 
D) stay the same;increase. 
E) stay the same;decrease. 
A) decrease;stay the same. 
B) increase;increase. 
C) decrease;increase. 
D) stay the same;increase. 
E) stay the same;decrease.

Question 14

Washburn Guitars markets its guitars to four distinct market segments.The firm's mass customization instruments are targeted at

Accepted Answer

A) first-time buyers. 
B) professional musicians. 
C) stars and famous musicians. 
D) large institutional buyers such as band programs. 
E) intermediate-skill players who may become professional musicians. 
A) first-time buyers. 
B) professional musicians. 
C) stars and famous musicians. 
D) large institutional buyers such as band programs. 
E) intermediate-skill players who may become professional musicians.

Question 15

Florida Power & Light,an electric power company,is the only source of electricity for consumers in most parts of the Florida panhandle.The company is a(n)________,despite the fact that it must seek approval from the state utility commission for the rates it can charge.

Accepted Answer

A) free enterprise firm 
B) oligopoly 
C) monopolistic competitor 
D) competitor in a pure competition 
E) pure monopoly 
A) free enterprise firm 
B) oligopoly 
C) monopolistic competitor 
D) competitor in a pure competition 
E) pure monopoly

Question 16

Products such as disposable diapers usually have

Accepted Answer

A) elastic demand. 
B) null elasticity. 
C) unitary demand. 
D) inelastic supply. 
E) inelastic demand. 
A) elastic demand. 
B) null elasticity. 
C) unitary demand. 
D) inelastic supply. 
E) inelastic demand.

Question 17

Variable cost refers to

Accepted Answer

A) the sum of the expenses of the firm that are stable and do not change with the quantity of a product that is produced and sold. 
B) the sum of the expenses of the firm that change with the quantity of a product that is produced and sold. 
C) the total expense incurred by a firm in producing and marketing a product,which equals the sum of fixed cost and marginal cost. 
D) the average amount of money received for selling one unit of a product or simply the price of that unit. 
E) the change in total cost that results from producing and marketing one additional unit of a product. 
A) the sum of the expenses of the firm that are stable and do not change with the quantity of a product that is produced and sold. 
B) the sum of the expenses of the firm that change with the quantity of a product that is produced and sold. 
C) the total expense incurred by a firm in producing and marketing a product,which equals the sum of fixed cost and marginal cost. 
D) the average amount of money received for selling one unit of a product or simply the price of that unit. 
E) the change in total cost that results from producing and marketing one additional unit of a product.

Question 18

________ = (Unit price × Quantity sold)− Total cost.

Accepted Answer

A) Total revenue 
B) Variable cost 
C) Net present value 
D) Profit 
E) Break-even point 
A) Total revenue 
B) Variable cost 
C) Net present value 
D) Profit 
E) Break-even point

Question 19

Which of the following would be an example of an objective in Step 1 of the price-setting process?

Accepted Answer

A) We need to set an initial price of $259 per unit. 
B) We need to obtain a 10 percent market share. 
C) We need to find the least expensive distributor. 
D) We need to make allowances for large quantity orders. 
E) We need to increase the price during the holiday shopping season. 
A) We need to set an initial price of $259 per unit. 
B) We need to obtain a 10 percent market share. 
C) We need to find the least expensive distributor. 
D) We need to make allowances for large quantity orders. 
E) We need to increase the price during the holiday shopping season.

Question 20

The unit variable cost (UVC)equals variable cost (VC)divided by

Accepted Answer

A) quantity (Q). 
B) fixed costs (F
C) . 
C) total cost (T
C) . 
D) total revenue (TR). 
E) price per unit of the product (P). 
A) quantity (Q). 
B) fixed costs (F
C) . 
C) total cost (T
C) . 
D) total revenue (TR). 
E) price per unit of the product (P).

Exam 13: Building the Price Foundation

What are the six major steps involved in setting prices?

If competitive market circumstances are such that there is almost no price competition,no product differentiation,and the only advertising informs prospects that the product is available,then the competitive market in this industry must be

Tara is enrolled for spring semester at college.The tuition is $6,000,but she has a scholarship for $1,000 as well as a work-study grant of $1,500.The health fees and student activity fees are $150 for the semester.What is the final price that Tara will pay for the spring semester?

Which of the following statements regarding pricing constraints is most accurate?

List four key factors used to estimate demand.

Total revenue refers to

Pricing objectives involve

Figure 13-7 -In the break-even chart in Figure 13-7 above,point A identifies the firm's ________ point.

A target return profit objective implies that a company chooses to

Which of the following statements is most accurate?

A negative aspect of selecting unit volume as a pricing objective is that

Assuming there is no change in a product's price or the quantity demanded,if a business owner wants to increase her advertising expenses by $500 monthly,this would cause total costs to ________ and the break-even quantity to

Washburn Guitars markets its guitars to four distinct market segments.The firm's mass customization instruments are targeted at

Florida Power & Light,an electric power company,is the only source of electricity for consumers in most parts of the Florida panhandle.The company is a(n)________,despite the fact that it must seek approval from the state utility commission for the rates it can charge.

Products such as disposable diapers usually have

Variable cost refers to

________ = (Unit price × Quantity sold)− Total cost.

Which of the following would be an example of an objective in Step 1 of the price-setting process?

The unit variable cost (UVC)equals variable cost (VC)divided by

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