Question 1

By definition,a markup of $1 on a cost of $2 translates to a markup of 40 percent.

Accepted Answer

A) True 
 B)False

Question 2

A publisher needed one of its best-selling authors to fly from his home in Richmond,Virginia,to Chicago,Illinois,in order to start a publicity campaign for the author's new book.The author could have taken a flight to Detroit,Michigan,changed planes,and then flew on to Chicago for about half the price of a non-stop flight from Richmond to Chicago.However,he chose the non-stop flight.He became less price sensitive because of

Accepted Answer

A) the availability of substitutes. 
B) the fact that someone else was paying the bill. 
C) the significance of the end benefit. 
D) the size of the total expenditure. 
E) the sunken investment he had made. 
A) the availability of substitutes. 
B) the fact that someone else was paying the bill. 
C) the significance of the end benefit. 
D) the size of the total expenditure. 
E) the sunken investment he had made.

Question 3

What is one disadvantage of break-even analysis?

Accepted Answer

A) It cannot be used to determine the break-even point in dollars. 
B) It is not helpful for evaluating what might happen to profits in different market environments. 
C) It does not consider the effect of price on the quantity that consumers will want. 
D) It is not helpful for evaluating alternatives. 
E) It is an extremely complicated method. 
A) It cannot be used to determine the break-even point in dollars. 
B) It is not helpful for evaluating what might happen to profits in different market environments. 
C) It does not consider the effect of price on the quantity that consumers will want. 
D) It is not helpful for evaluating alternatives. 
E) It is an extremely complicated method.

Question 4

The sequence of markups firms use at different levels in a channel is referred to as a

Accepted Answer

A) market sequence. 
B) markup chain. 
C) markup margin. 
D) standard markup. 
E) markup channel. 
A) market sequence. 
B) markup chain. 
C) markup margin. 
D) standard markup. 
E) markup channel.

Question 5

The impact of substitutes on price sensitivity is greatest when

Accepted Answer

A) customers can compare prices. 
B) someone else is paying the bill. 
C) expenditures are broken into smaller pieces. 
D) the outcome is less significant. 
E) the customer wants to switch brands. 
A) customers can compare prices. 
B) someone else is paying the bill. 
C) expenditures are broken into smaller pieces. 
D) the outcome is less significant. 
E) the customer wants to switch brands.

Question 6

Sam's Club purchases a 24-pack of bottled water from a wholesaler for $3.85 and wants a markup of 25 percent.What is the price that Sam's Club charges its customers?

Accepted Answer

A) $4.25 
B) $4.75 
C) $4.95 
D) $5.13 
E) $5.75 
A) $4.25 
B) $4.75 
C) $4.95 
D) $5.13 
E) $5.75

Question 7

Even if a manager's estimate of a demand curve is not exact,there is usually a profitable range around the price that would maximize profit.

Accepted Answer

A) True 
 B)False

Question 8

Demand-backward pricing

Accepted Answer

A) starts with an acceptable final consumer price and works backward to what producers can charge. 
B) ignores demand estimates. 
C) is only sensible when the channel captain is a large retailer. 
D) is an average-cost pricing approach. 
E) None of these answers is correct. 
A) starts with an acceptable final consumer price and works backward to what producers can charge. 
B) ignores demand estimates. 
C) is only sensible when the channel captain is a large retailer. 
D) is an average-cost pricing approach. 
E) None of these answers is correct.

Question 9

The ad for a very expensive online course states,"You will become the person that you want to be." With regard to price sensitivity,the ad

Accepted Answer

A) focuses on an emotional benefit to make customers less price sensitive. 
B) decreases the significance of the end benefit of the purchase to increase price sensitivity. 
C) presents the marketing manager with an ethical dilemma. 
D) makes people more price sensitive by promising great benefit. 
E) offers customers an incentive to cover switching costs. 
A) focuses on an emotional benefit to make customers less price sensitive. 
B) decreases the significance of the end benefit of the purchase to increase price sensitivity. 
C) presents the marketing manager with an ethical dilemma. 
D) makes people more price sensitive by promising great benefit. 
E) offers customers an incentive to cover switching costs.

Question 10

A company has total fixed costs of $400,000.Its fixed-cost contribution per unit is $10.00,and its price per unit is $5.00.What is the break-even point in sales dollars?

Accepted Answer

A) $200,000 
B) $2,000,000 
C) $4,000,000 
D) $800,000 
E) This cannot be determined with the information provided. 
A) $200,000 
B) $2,000,000 
C) $4,000,000 
D) $800,000 
E) This cannot be determined with the information provided.

Question 11

Good Health Co.has set a suggested retail list price of $40 on its new vitamin tablets on the assumption that its target market will find the product attractive at this price.From this suggested retail list price,Good Health has subtracted its usual chain of markups for wholesalers and retailers to obtain its own selling price of $17.This is

Accepted Answer

A) demand-backward pricing. 
B) full-line pricing. 
C) average-cost pricing. 
D) odd-even pricing. 
E) prestige pricing. 
A) demand-backward pricing. 
B) full-line pricing. 
C) average-cost pricing. 
D) odd-even pricing. 
E) prestige pricing.

Question 12

A firm's average fixed cost increases as its output increases.

Accepted Answer

A) True 
 B)False

Question 13

The price per unit is $1.00.The average variable cost per unit is 60 cents.The total fixed cost is $20,000.What is the break-even point?

Accepted Answer

A) 75,000 units 
B) 50,000 units 
C) 20,000 units 
D) 33,334 units 
E) 40,000 units 
A) 75,000 units 
B) 50,000 units 
C) 20,000 units 
D) 33,334 units 
E) 40,000 units

Question 14

Which of the following statements about the break-even point (BEP)is true?

Accepted Answer

A) The firm's total revenue will equal its variable costs. 
B) The firm's total sales will equal its total production. 
C) The firm's total cost will equal its total revenue. 
D) The firm's total profits will equal its total cost. 
E) The firm's total variable costs equal its total fixed cost. 
A) The firm's total revenue will equal its variable costs. 
B) The firm's total sales will equal its total production. 
C) The firm's total cost will equal its total revenue. 
D) The firm's total profits will equal its total cost. 
E) The firm's total variable costs equal its total fixed cost.

Question 15

High markups on a product could lead to low profits when

Accepted Answer

A) competitors have higher markups. 
B) there are no substitutes. 
C) demand is inelastic. 
D) sales dip due to high prices. 
E) supply is inelastic. 
A) competitors have higher markups. 
B) there are no substitutes. 
C) demand is inelastic. 
D) sales dip due to high prices. 
E) supply is inelastic.

Question 16

Auctions have not proved very effective in determining how much potential customers will (or will not)pay for a product.

Accepted Answer

A) True 
 B)False

Question 17

Given the following data,what is the break-even point in units? Total fixed cost = $120,000
Variable cost per unit = $0.60
Selling price per unit = $1.10

Accepted Answer

A) 100,000 
B) 240,000 
C) 200,000 
D) 218,182 
E) 50,000 
A) 100,000 
B) 240,000 
C) 200,000 
D) 218,182 
E) 50,000

Question 18

Each possible price has its own break-even point.

Accepted Answer

A) True 
 B)False

Question 19

When the end benefit of a purchase is significant to the customer,the customer is likely to be less price sensitive.

Accepted Answer

A) True 
 B)False

Question 20

When a firm's average variable cost is constant no matter how much is produced,

Accepted Answer

A) the firm's average cost will increase as the quantity produced increases. 
B) the firm's fixed cost must be zero. 
C) the firm's average cost will also be constant. 
D) the firm's average fixed cost will also be constant. 
E) the firm's average cost will decrease as the quantity produced increases. 
A) the firm's average cost will increase as the quantity produced increases. 
B) the firm's fixed cost must be zero. 
C) the firm's average cost will also be constant. 
D) the firm's average fixed cost will also be constant. 
E) the firm's average cost will decrease as the quantity produced increases.

By definition,a markup of $1 on a cost of $2 translates to a markup of 40 percent.

What is one disadvantage of break-even analysis?

The sequence of markups firms use at different levels in a channel is referred to as a

The impact of substitutes on price sensitivity is greatest when

Sam's Club purchases a 24-pack of bottled water from a wholesaler for $3.85 and wants a markup of 25 percent.What is the price that Sam's Club charges its customers?

Even if a manager's estimate of a demand curve is not exact,there is usually a profitable range around the price that would maximize profit.

Demand-backward pricing

The ad for a very expensive online course states,"You will become the person that you want to be." With regard to price sensitivity,the ad

A company has total fixed costs of $400,000.Its fixed-cost contribution per unit is $10.00,and its price per unit is $5.00.What is the break-even point in sales dollars?

A firm's average fixed cost increases as its output increases.

The price per unit is $1.00.The average variable cost per unit is 60 cents.The total fixed cost is $20,000.What is the break-even point?

Which of the following statements about the break-even point (BEP)is true?

High markups on a product could lead to low profits when

Auctions have not proved very effective in determining how much potential customers will (or will not)pay for a product.

Given the following data,what is the break-even point in units? Total fixed cost = $120,000 Variable cost per unit = $0.60 Selling price per unit = $1.10

Each possible price has its own break-even point.

When the end benefit of a purchase is significant to the customer,the customer is likely to be less price sensitive.

When a firm's average variable cost is constant no matter how much is produced,

Marketings Value to Consumers, Firms, and Society

Marketing Strategy Planning

Evaluating Opportunities in the Changing Market Environment

Focusing Marketing Strategy With Segmentation and Positioning

Final Consumers and Their Buying Behavior

Business and Organizational Customers and Their Buying Behavior

Improving Decisions With Marketing Information

Elements of Product Planning for Goods and Services

Product Management and New-Product Development

Place and Development of Channel Systems

Distribution Customer Service and Logistics

Retailers, Wholesalers, and Their Strategy Planning

Promotionintroduction to Integrated Marketing Communications

Personal Selling and Customer Service

Advertising and Sales Promotion

Publicity: Promotion Using Earned Media, Owned Media, and Social Media

Pricing Objectives and Policies

Ethical Marketing in a Consumer-Oriented World: Appraisal and Challenges

Filters

Exam 18: Price Setting in the Business World

By definition,a markup of $1 on a cost of $2 translates to a markup of 40 percent.

What is one disadvantage of break-even analysis?

The sequence of markups firms use at different levels in a channel is referred to as a

The impact of substitutes on price sensitivity is greatest when

Sam's Club purchases a 24-pack of bottled water from a wholesaler for $3.85 and wants a markup of 25 percent.What is the price that Sam's Club charges its customers?

Even if a manager's estimate of a demand curve is not exact,there is usually a profitable range around the price that would maximize profit.

Demand-backward pricing

The ad for a very expensive online course states,"You will become the person that you want to be." With regard to price sensitivity,the ad

A company has total fixed costs of $400,000.Its fixed-cost contribution per unit is $10.00,and its price per unit is $5.00.What is the break-even point in sales dollars?

A firm's average fixed cost increases as its output increases.

The price per unit is $1.00.The average variable cost per unit is 60 cents.The total fixed cost is $20,000.What is the break-even point?

Which of the following statements about the break-even point (BEP)is true?

High markups on a product could lead to low profits when

Auctions have not proved very effective in determining how much potential customers will (or will not)pay for a product.

Given the following data,what is the break-even point in units? Total fixed cost = $120,000 Variable cost per unit = $0.60 Selling price per unit = $1.10

Each possible price has its own break-even point.

When the end benefit of a purchase is significant to the customer,the customer is likely to be less price sensitive.

When a firm's average variable cost is constant no matter how much is produced,

Marketings Value to Consumers, Firms, and Society

Marketing Strategy Planning

Evaluating Opportunities in the Changing Market Environment

Focusing Marketing Strategy With Segmentation and Positioning

Final Consumers and Their Buying Behavior

Business and Organizational Customers and Their Buying Behavior

Improving Decisions With Marketing Information

Elements of Product Planning for Goods and Services

Product Management and New-Product Development

Place and Development of Channel Systems

Distribution Customer Service and Logistics

Retailers, Wholesalers, and Their Strategy Planning

Promotionintroduction to Integrated Marketing Communications

Personal Selling and Customer Service

Advertising and Sales Promotion

Publicity: Promotion Using Earned Media, Owned Media, and Social Media

Pricing Objectives and Policies

Ethical Marketing in a Consumer-Oriented World: Appraisal and Challenges

Filters