Question 1

Marginal analysis

Accepted Answer

A)  assumes that the firm's total revenue curve is a straight line. 
B)  bases the analysis on the cost of the first few units sold. 
C)  explicitly considers demand when calculating price. 
D)  takes into account the break-even point. 
E)  None of these alternatives is correct. 
A)  assumes that the firm's total revenue curve is a straight line. 
B)  bases the analysis on the cost of the first few units sold. 
C)  explicitly considers demand when calculating price. 
D)  takes into account the break-even point. 
E)  None of these alternatives is correct.

Question 2

Given the following data, compute the BEP in units: Selling price = $2.00
Variable cost = $0.75
Fixed cost = $250,000

Accepted Answer

A)  333,334 
B)  200,000 
C)  125,000 
D)  400,000 
E)  Cannot be determined with this information. 
A)  333,334 
B)  200,000 
C)  125,000 
D)  400,000 
E)  Cannot be determined with this information.

Question 3

The break-even point is the intersection of the total cost curve and the total profit curve.

Accepted Answer

A) True 
 B)False

Question 4

As output increases, a firm's average fixed cost probably will go down.

Accepted Answer

A) True 
 B)False

Question 5

With bid pricing, it is best for the bidder to use the same overhead and profit rates on all jobs since that will make it easy to estimate costs and eventually will increase profits.

Accepted Answer

A) True 
 B)False

Question 6

The Roulette Corporation, a video game manufacturer, sets a single price for a set of 5 video games, a video game console, and a pair of speakers. This pricing strategy is called _____.

Accepted Answer

A)  full-line pricing 
B)  complementary product pricing 
C)  product-bundle pricing 
D)  bid pricing 
E)  psychological pricing 
A)  full-line pricing 
B)  complementary product pricing 
C)  product-bundle pricing 
D)  bid pricing 
E)  psychological pricing

Question 7

Which of the following costs decrease with increase in output?

Accepted Answer

A)  Total variable cost 
B)  Total fixed cost 
C)  Total cost 
D)  Average fixed cost per unit 
E)  Sales commissions 
A)  Total variable cost 
B)  Total fixed cost 
C)  Total cost 
D)  Average fixed cost per unit 
E)  Sales commissions

Question 8

Some consumers maintain a "price-quality association," meaning that if a product has a high price, they assume the product must have high quality. This "price-quality association" is the basis for the use of:

Accepted Answer

A)  Odd-even pricing. 
B)  Prestige pricing. 
C)  Leader pricing. 
D)  Reference pricing. 
E)  Price lining. 
A)  Odd-even pricing. 
B)  Prestige pricing. 
C)  Leader pricing. 
D)  Reference pricing. 
E)  Price lining.

Question 9

Sequential price reductions and clearance sales are the same thing.

Accepted Answer

A) True 
 B)False

Question 10

A retail store advertises an SLR digital camera for $350. Once bargain hunters come to the store, salespeople point out the disadvantages of the low-priced camera and try to convince them to trade up to a better, and more expensive, unit. This is an example of

Accepted Answer

A)  price following. 
B)  bait pricing. 
C)  odd-even pricing. 
D)  low pricing. 
E)  everyday low pricing. 
A)  price following. 
B)  bait pricing. 
C)  odd-even pricing. 
D)  low pricing. 
E)  everyday low pricing.

Question 11

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 12

A retailer of men's suits who is advertising a popular brand of dress shirts at a reduced price to attract customers is using:

Accepted Answer

A)  price lining. 
B)  leader pricing. 
C)  odd-even pricing. 
D)  bait pricing. 
E)  prestige pricing. 
A)  price lining. 
B)  leader pricing. 
C)  odd-even pricing. 
D)  bait pricing. 
E)  prestige pricing.

Question 13

A typical break-even analysis assumes that:

Accepted Answer

A)  the total revenue curve is a straight line. 
B)  the demand curve faced by the firm is horizontal. 
C)  the average variable cost is the same at different levels of output. 
D)  profits will grow continually beyond the break-even point. 
E)  All of these are assumptions of a typical break-even analysis. 
A)  the total revenue curve is a straight line. 
B)  the demand curve faced by the firm is horizontal. 
C)  the average variable cost is the same at different levels of output. 
D)  profits will grow continually beyond the break-even point. 
E)  All of these are assumptions of a typical break-even analysis.

Question 14

Items with lower markups may be more profitable-if the stockturn is higher.

Accepted Answer

A) True 
 B)False

Question 15

The major weakness of "average-cost pricing" is that:

Accepted Answer

A)  it ignores likely customer demand at different prices. 
B)  it usually leads to losses instead of profits. 
C)  it always results in a profit that is less than expected. 
D)  it is too hard for most managers to use. 
E)  All of these are major weaknesses of "average-cost pricing." 
A)  it ignores likely customer demand at different prices. 
B)  it usually leads to losses instead of profits. 
C)  it always results in a profit that is less than expected. 
D)  it is too hard for most managers to use. 
E)  All of these are major weaknesses of "average-cost pricing."

Question 16

A standard markup is often set close to the firm's

Accepted Answer

A)  gross margin. 
B)  net profits. 
C)  overheads. 
D)  operating costs. 
E)  competitors' costs. 
A)  gross margin. 
B)  net profits. 
C)  overheads. 
D)  operating costs. 
E)  competitors' costs.

Question 17

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 18

_____ means offering a specific price for each possible job rather than setting a price that applies for all customers.

Accepted Answer

A)  Price lining 
B)  Odd-even pricing 
C)  Product bundle pricing 
D)  Bid pricing 
E)  Price leading 
A)  Price lining 
B)  Odd-even pricing 
C)  Product bundle pricing 
D)  Bid pricing 
E)  Price leading

Question 19

If a firm's total fixed cost is $400,000 and its fixed cost contribution per unit is $10, its break-even in units is:

Accepted Answer

A)  30,000. 
B)  40,000 
C)  10,000. 
D)  20,000. 
E)  Cannot be determined with this information. 
A)  30,000. 
B)  40,000 
C)  10,000. 
D)  20,000. 
E)  Cannot be determined with this information.

Question 20

Retailers of which of the following products would probably have the highest stockturn rate?

Accepted Answer

A)  furniture 
B)  women's clothing 
C)  hardware 
D)  fresh seafood 
E)  bowling balls 
A)  furniture 
B)  women's clothing 
C)  hardware 
D)  fresh seafood 
E)  bowling balls

Marginal analysis

Given the following data, compute the BEP in units: Selling price = $2.00 Variable cost = $0.75 Fixed cost = $250,000

The break-even point is the intersection of the total cost curve and the total profit curve.

As output increases, a firm's average fixed cost probably will go down.

With bid pricing, it is best for the bidder to use the same overhead and profit rates on all jobs since that will make it easy to estimate costs and eventually will increase profits.

The Roulette Corporation, a video game manufacturer, sets a single price for a set of 5 video games, a video game console, and a pair of speakers. This pricing strategy is called _____.

Which of the following costs decrease with increase in output?

Some consumers maintain a "price-quality association," meaning that if a product has a high price, they assume the product must have high quality. This "price-quality association" is the basis for the use of:

Sequential price reductions and clearance sales are the same thing.

A retail store advertises an SLR digital camera for $350. Once bargain hunters come to the store, salespeople point out the disadvantages of the low-priced camera and try to convince them to trade up to a better, and more expensive, unit. This is an example of

A retailer of men's suits who is advertising a popular brand of dress shirts at a reduced price to attract customers is using:

A typical break-even analysis assumes that:

Items with lower markups may be more profitable-if the stockturn is higher.

The major weakness of "average-cost pricing" is that:

A standard markup is often set close to the firm's

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.

_____ means offering a specific price for each possible job rather than setting a price that applies for all customers.

If a firm's total fixed cost is $400,000 and its fixed cost contribution per unit is $10, its break-even in units is:

Retailers of which of the following products would probably have the highest stockturn rate?

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

Promotion-Introduction to Integrated Marketing Communications

Personal Selling and Customer Service

Advertising, Publicity, and Sales Promotion

Pricing Objectives and Policies

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

Filters

Exam 17: Price Setting in the Business World

Marginal analysis

Given the following data, compute the BEP in units: Selling price = $2.00 Variable cost = $0.75 Fixed cost = $250,000

The break-even point is the intersection of the total cost curve and the total profit curve.

As output increases, a firm's average fixed cost probably will go down.

With bid pricing, it is best for the bidder to use the same overhead and profit rates on all jobs since that will make it easy to estimate costs and eventually will increase profits.

The Roulette Corporation, a video game manufacturer, sets a single price for a set of 5 video games, a video game console, and a pair of speakers. This pricing strategy is called _____.

Which of the following costs decrease with increase in output?

Some consumers maintain a "price-quality association," meaning that if a product has a high price, they assume the product must have high quality. This "price-quality association" is the basis for the use of:

Sequential price reductions and clearance sales are the same thing.

A retail store advertises an SLR digital camera for $350. Once bargain hunters come to the store, salespeople point out the disadvantages of the low-priced camera and try to convince them to trade up to a better, and more expensive, unit. This is an example of

A retailer of men's suits who is advertising a popular brand of dress shirts at a reduced price to attract customers is using:

A typical break-even analysis assumes that:

Items with lower markups may be more profitable-if the stockturn is higher.

The major weakness of "average-cost pricing" is that:

A standard markup is often set close to the firm's

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.

_____ means offering a specific price for each possible job rather than setting a price that applies for all customers.

If a firm's total fixed cost is $400,000 and its fixed cost contribution per unit is $10, its break-even in units is:

Retailers of which of the following products would probably have the highest stockturn rate?

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

Promotion-Introduction to Integrated Marketing Communications

Personal Selling and Customer Service

Advertising, Publicity, and Sales Promotion

Pricing Objectives and Policies

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

Filters