Question 1

If a company raises its price per unit, but keeps total fixed cost and variable cost per unit the same, the break-even point will be lower.

Accepted Answer

A) True 
 B)False

Question 2

Product-bundle pricing may encourage customers to spend more and buy products that they would not buy otherwise.

Accepted Answer

A) True 
 B)False

Question 3

Leader pricing:

Accepted Answer

A)  seeks a big profit on the leader items. 
B)  is usually used for a retailer's major product line-to give it a competitive advantage. 
C)  is different from bait pricing in that the marketing manager really expects to sell leader priced items. 
D)  assumes that some part of the demand curve is upward sloping to the right. 
E)  is banned in interstate commerce. 
A)  seeks a big profit on the leader items. 
B)  is usually used for a retailer's major product line-to give it a competitive advantage. 
C)  is different from bait pricing in that the marketing manager really expects to sell leader priced items. 
D)  assumes that some part of the demand curve is upward sloping to the right. 
E)  is banned in interstate commerce.

Question 4

A paving contractor wants to work on road construction contracts administered and paid for by the state government. The contractor submits a sealed proposal to the state department of transportation for each construction job. The proposal contains a description of how the contractor will fulfill the specifications for the job at a specified price. The contractor is engaging in:

Accepted Answer

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

Question 5

Prestige pricing is most common for luxury products such as furs, jewelry, and perfume.

Accepted Answer

A) True 
 B)False

Question 6

According to the text, the two basic approaches to price setting are

Accepted Answer

A)  supply-oriented and demand-oriented price setting. 
B)  cost-oriented and demand-oriented price setting. 
C)  sales-oriented and profit-oriented price setting. 
D)  cost-oriented and profit-oriented price setting. 
E)  average-cost pricing and break-even analysis. 
A)  supply-oriented and demand-oriented price setting. 
B)  cost-oriented and demand-oriented price setting. 
C)  sales-oriented and profit-oriented price setting. 
D)  cost-oriented and profit-oriented price setting. 
E)  average-cost pricing and break-even analysis.

Question 7

Demand estimates are required for demand-backward pricing to be successful.

Accepted Answer

A) True 
 B)False

Question 8

Average fixed cost goes down as output decreases.

Accepted Answer

A) True 
 B)False

Question 9

A company has total fixed cost of $120,000. Its variable cost per unit is $2.00 and its price per unit is $3.50. The break-even point in units is:

Accepted Answer

A)  60,000. 
B)  80,000. 
C)  34,286. 
D)  21,818. 
E)  Cannot be determined from the information provided. 
A)  60,000. 
B)  80,000. 
C)  34,286. 
D)  21,818. 
E)  Cannot be determined from the information provided.

Question 10

Given the following data, compute the BEP in DOLLARS: Selling price = $2.00
Variable cost = $1.00
Fixed cost = $150,000

Accepted Answer

A)  $300,000 
B)  $400,000 
C)  $100,000 
D)  $200,000 
E)  $50,000 
A)  $300,000 
B)  $400,000 
C)  $100,000 
D)  $200,000 
E)  $50,000

Question 11

Marci, a student, is used to paying $1.25 for a 12-ounce can of Diet Coke from various vending machines on campus, so she expects the new vending machine just installed outside her Chemistry classroom to charge her the same amount for her favorite beverage. For Marci, the $1.25 price is a:

Accepted Answer

A)  reference price 
B)  gross price 
C)  bundle price 
D)  leader price 
E)  bait price 
A)  reference price 
B)  gross price 
C)  bundle price 
D)  leader price 
E)  bait price

Question 12

Customers are likely to be less price sensitive

Accepted Answer

A)  the greater the total expenditure. 
B)  the greater their share of the cost. 
C)  the greater the significance of the end benefit. 
D)  the easier it is to compare prices. 
E)  None of these alternatives is correct. 
A)  the greater the total expenditure. 
B)  the greater their share of the cost. 
C)  the greater the significance of the end benefit. 
D)  the easier it is to compare prices. 
E)  None of these alternatives is correct.

Question 13

A firm's average variable cost (per unit) is obtained by dividing the total fixed cost by the total variable cost.

Accepted Answer

A) True 
 B)False

Question 14

When Walgreens Drugstore advertises one price for the cost of a roll of film and the cost of processing it, it is using

Accepted Answer

A)  complementary product pricing. 
B)  flexible pricing. 
C)  product-bundle pricing. 
D)  a one-price policy. 
E)  bait pricing. 
A)  complementary product pricing. 
B)  flexible pricing. 
C)  product-bundle pricing. 
D)  a one-price policy. 
E)  bait pricing.

Question 15

Mark is trying to determine his firm's average cost per unit of production. He finds that the cost for all labor and materials is $80,000 and fixed overhead expenses are $40,000. If the company produces 20,000 items in the time period, the average cost is

Accepted Answer

A)  $12. 
B)  $2. 
C)  $6. 
D)  $4. 
E)  $10. 
A)  $12. 
B)  $2. 
C)  $6. 
D)  $4. 
E)  $10.

Question 16

If the price per unit is $1.00 and the average variable cost per unit is 60 cents, the fixed cost contribution per unit is $1.40.

Accepted Answer

A) True 
 B)False

Question 17

An advantage of average-cost pricing is that it considers competitors' costs and prices.

Accepted Answer

A) True 
 B)False

Question 18

Switching costs refer to costs that a customer faces when buying a product that is different from what has been purchased or used in the past.

Accepted Answer

A) True 
 B)False

Question 19

As output increases, average cost decreases continually because

Accepted Answer

A)  average variable cost per unit is increasing. 
B)  average fixed cost per unit is decreasing. 
C)  total variable cost is increasing. 
D)  total variable cost is decreasing. 
E)  total fixed cost is reducing. 
A)  average variable cost per unit is increasing. 
B)  average fixed cost per unit is decreasing. 
C)  total variable cost is increasing. 
D)  total variable cost is decreasing. 
E)  total fixed cost is reducing.

Question 20

When consumers decide to purchase a music CD from Amazon.com, the company's website often suggests that consumers purchase an additional CD by the same artist for a combined price that is lower than the two CDs would sell for separately. Amazon.com is using:

Accepted Answer

A)  Product-bundle pricing. 
B)  Complementary product pricing. 
C)  Full-line pricing. 
D)  Bid pricing. 
E)  Demand-backward pricing. 
A)  Product-bundle pricing. 
B)  Complementary product pricing. 
C)  Full-line pricing. 
D)  Bid pricing. 
E)  Demand-backward pricing.

If a company raises its price per unit, but keeps total fixed cost and variable cost per unit the same, the break-even point will be lower.

Product-bundle pricing may encourage customers to spend more and buy products that they would not buy otherwise.

Leader pricing:

Prestige pricing is most common for luxury products such as furs, jewelry, and perfume.

According to the text, the two basic approaches to price setting are

Demand estimates are required for demand-backward pricing to be successful.

Average fixed cost goes down as output decreases.

A company has total fixed cost of $120,000. Its variable cost per unit is $2.00 and its price per unit is $3.50. The break-even point in units is:

Given the following data, compute the BEP in DOLLARS: Selling price = $2.00 Variable cost = $1.00 Fixed cost = $150,000

Marci, a student, is used to paying $1.25 for a 12-ounce can of Diet Coke from various vending machines on campus, so she expects the new vending machine just installed outside her Chemistry classroom to charge her the same amount for her favorite beverage. For Marci, the $1.25 price is a:

Customers are likely to be less price sensitive

A firm's average variable cost (per unit) is obtained by dividing the total fixed cost by the total variable cost.

When Walgreens Drugstore advertises one price for the cost of a roll of film and the cost of processing it, it is using

Mark is trying to determine his firm's average cost per unit of production. He finds that the cost for all labor and materials is $80,000 and fixed overhead expenses are $40,000. If the company produces 20,000 items in the time period, the average cost is

If the price per unit is $1.00 and the average variable cost per unit is 60 cents, the fixed cost contribution per unit is $1.40.

An advantage of average-cost pricing is that it considers competitors' costs and prices.

Switching costs refer to costs that a customer faces when buying a product that is different from what has been purchased or used in the past.

As output increases, average cost decreases continually because

When consumers decide to purchase a music CD from Amazon.com, the company's website often suggests that consumers purchase an additional CD by the same artist for a combined price that is lower than the two CDs would sell for separately. Amazon.com is using:

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

If a company raises its price per unit, but keeps total fixed cost and variable cost per unit the same, the break-even point will be lower.

Product-bundle pricing may encourage customers to spend more and buy products that they would not buy otherwise.

Leader pricing:

Prestige pricing is most common for luxury products such as furs, jewelry, and perfume.

According to the text, the two basic approaches to price setting are

Demand estimates are required for demand-backward pricing to be successful.

Average fixed cost goes down as output decreases.

A company has total fixed cost of $120,000. Its variable cost per unit is $2.00 and its price per unit is $3.50. The break-even point in units is:

Given the following data, compute the BEP in DOLLARS: Selling price = $2.00 Variable cost = $1.00 Fixed cost = $150,000

Marci, a student, is used to paying $1.25 for a 12-ounce can of Diet Coke from various vending machines on campus, so she expects the new vending machine just installed outside her Chemistry classroom to charge her the same amount for her favorite beverage. For Marci, the $1.25 price is a:

Customers are likely to be less price sensitive

A firm's average variable cost (per unit) is obtained by dividing the total fixed cost by the total variable cost.

When Walgreens Drugstore advertises one price for the cost of a roll of film and the cost of processing it, it is using

Mark is trying to determine his firm's average cost per unit of production. He finds that the cost for all labor and materials is $80,000 and fixed overhead expenses are $40,000. If the company produces 20,000 items in the time period, the average cost is

If the price per unit is $1.00 and the average variable cost per unit is 60 cents, the fixed cost contribution per unit is $1.40.

An advantage of average-cost pricing is that it considers competitors' costs and prices.

Switching costs refer to costs that a customer faces when buying a product that is different from what has been purchased or used in the past.

As output increases, average cost decreases continually because

When consumers decide to purchase a music CD from Amazon.com, the company's website often suggests that consumers purchase an additional CD by the same artist for a combined price that is lower than the two CDs would sell for separately. Amazon.com is using:

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