Question 1

Total fixed cost

Accepted Answer

A)  is dependent on production volumes. 
B)  stays the same even if production stops temporarily. 
C)  includes wages and sales commissions. 
D)  is the sum of average fixed costs and variable overheads. 
E)  is dependent on minor changes in output volume. 
A)  is dependent on production volumes. 
B)  stays the same even if production stops temporarily. 
C)  includes wages and sales commissions. 
D)  is the sum of average fixed costs and variable overheads. 
E)  is dependent on minor changes in output volume.

Question 2

Which of the following pricing approaches should be used by a profit-oriented retailer if its demand curve is down-sloping to the right for a while-but then actually bends back to the left at lower prices?

Accepted Answer

A)  Psychological pricing 
B)  Prestige pricing 
C)  Average-cost pricing 
D)  Bait pricing 
E)  Penetration pricing 
A)  Psychological pricing 
B)  Prestige pricing 
C)  Average-cost pricing 
D)  Bait pricing 
E)  Penetration pricing

Question 3

Alex's Knot Shop prices its ties at $5 intervals from $10 to $25 because most customers find these prices appealing and easier to compare. This is:

Accepted Answer

A)  prestige pricing. 
B)  penetration pricing. 
C)  price lining. 
D)  odd-even pricing. 
E)  value in use pricing. 
A)  prestige pricing. 
B)  penetration pricing. 
C)  price lining. 
D)  odd-even pricing. 
E)  value in use pricing.

Question 4

The major disadvantage of price lining is that it is complicated for both clerks and customers.

Accepted Answer

A) True 
 B)False

Question 5

Price lining:

Accepted Answer

A)  is quite similar to prestige pricing. 
B)  can simplify both buying and selling. 
C)  tends to reduce turnover rates. 
D)  results in larger inventories. 
E)  All of these alternatives are correct. 
A)  is quite similar to prestige pricing. 
B)  can simplify both buying and selling. 
C)  tends to reduce turnover rates. 
D)  results in larger inventories. 
E)  All of these alternatives are correct.

Question 6

Average-cost pricing may lead to losses because there are a variety of costs-and each changes

Accepted Answer

A)  in a similar fashion. 
B)  in a different way as output changes. 
C)  in a similar fashion with time. 
D)  in an exponential manner. 
E)  in a highly predictable and similar manner. 
A)  in a similar fashion. 
B)  in a different way as output changes. 
C)  in a similar fashion with time. 
D)  in an exponential manner. 
E)  in a highly predictable and similar manner.

Question 7

Use this information for question that refer to the Sporting Products, Inc. (SPI) case. Randy Todd, marketing manager for Sporting Products, Inc. (SPI), is thinking about how changes taking place among retailers in his channel might impact his strategy.
SPI sells the products it produces through wholesalers and retailers. For example, SPI sells basketballs to Wholesale Supply for $8.00. Wholesale Supply uses a 20 percent markup and most of its "sport shop" retailer customers, like Robinson's Sporting Goods, use a 33 percent markup to arrive at the price they charge final consumers. However, one fast growing retail chain, Sports Depot, only uses a 20 percent markup for basketballs, even though it pays Wholesale Supply the same price as other retailers. Furthermore, Sports Depot occasionally lowers the price of basketballs and sells them at cost-to draw customers into its stores and stimulate sales of its pricey basketball shoes.
Sports Depot is also using other pricing approaches that are different from the sports shops that usually handle SPI products. For example, Sports Depot prices all of its baseball gloves at $20, $40, or $60-with no prices in between. There are three big bins - one for each price point.
Todd is also curious about how Sports Depot's new strategy to increase sales of tennis balls will work out. The basic idea is to sell tennis balls in large quantities to nonprofit groups who resell the balls to raise money. For example, a service organization at a local college bought 2,000 tennis balls printed with the college logo. Sports Depot charged $.50 each for the tennis balls-plus a $500 one-time charge for the stamp to print the logo. The service group plans to resell the tennis balls for $2.50 each and contribute the profits to a shelter for the homeless.
Todd is not certain if Sports Depot ideas will affect SPI's plans. For example, SPI is considering adding tennis racquets to the lines it produces. This would require a $500,000 addition to its factory as well as the purchase of new equipment that costs $1,000,000. The variable cost to produce a tennis racquet would be $20, but Todd thinks that SPI could sell the racquet at a wholesale price of $40 each. That would allow most retailers to add their normal markup and make a profit. However, if Sports Depot sells the racquet at a lower than normal price other retailers might decide to carry it.
SPI pays its salespeople a commission on each product they sell. The commission is:

Accepted Answer

A)  part of the total cost - but not specifically a fixed or a variable cost. 
B)  part of the total fixed cost. 
C)  not included in figuring average cost. 
D)  a variable cost. 
E)  none of these alternatives is correct. 
A)  part of the total cost - but not specifically a fixed or a variable cost. 
B)  part of the total fixed cost. 
C)  not included in figuring average cost. 
D)  a variable cost. 
E)  none of these alternatives is correct.

Question 8

High Meadow Mfg. Co. sold its product through wholesalers and retailers-allowing the wholesalers a markup of 25 percent and retailers a markup of 40 percent. If the retail selling price is $100 and the manufacturer's cost is $30, what markup in dollars did High Meadow receive on the sale of this product?

Accepted Answer

A)  $5.00 
B)  $13.50 
C)  $15.00 
D)  $10.00 
E)  $20.00 
A)  $5.00 
B)  $13.50 
C)  $15.00 
D)  $10.00 
E)  $20.00

Question 9

An intermediary seeking high profits should:

Accepted Answer

A)  use the lowest markup that will still cover selling expenses. 
B)  use price lining. 
C)  use high markups. 
D)  choose the markup which maximizes turnover. 
E)  try to find the markup level related to the most profitable price. 
A)  use the lowest markup that will still cover selling expenses. 
B)  use price lining. 
C)  use high markups. 
D)  choose the markup which maximizes turnover. 
E)  try to find the markup level related to the most profitable price.

Question 10

There is only one price that will be profitable for firms with down-sloping demand curves.

Accepted Answer

A) True 
 B)False

Total fixed cost

Which of the following pricing approaches should be used by a profit-oriented retailer if its demand curve is down-sloping to the right for a while-but then actually bends back to the left at lower prices?

Alex's Knot Shop prices its ties at $5 intervals from $10 to $25 because most customers find these prices appealing and easier to compare. This is:

The major disadvantage of price lining is that it is complicated for both clerks and customers.

Price lining:

Average-cost pricing may lead to losses because there are a variety of costs-and each changes

An intermediary seeking high profits should:

There is only one price that will be profitable for firms with down-sloping demand curves.

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

Total fixed cost

Which of the following pricing approaches should be used by a profit-oriented retailer if its demand curve is down-sloping to the right for a while-but then actually bends back to the left at lower prices?

Alex's Knot Shop prices its ties at $5 intervals from $10 to $25 because most customers find these prices appealing and easier to compare. This is:

The major disadvantage of price lining is that it is complicated for both clerks and customers.

Price lining:

Average-cost pricing may lead to losses because there are a variety of costs-and each changes

An intermediary seeking high profits should:

There is only one price that will be profitable for firms with down-sloping demand curves.

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