Question 1

All customers have the same reference price for the same basic type of purchase.

Accepted Answer

A) True 
 B)False

Question 2

Even if a firm's average variable cost remains constant per unit, its average cost will increase as output increases.

Accepted Answer

A) True 
 B)False

Question 3

Each possible price has its own break-even point.

Accepted Answer

A) True 
 B)False

Question 4

Average-cost pricing means adding a reasonable markup to the total cost of a product.

Accepted Answer

A) True 
 B)False

Question 5

Customers tend to be more price sensitive

Accepted Answer

A)  the greater the total expenditure. 
B)  when someone else pays the bill. 
C)  when someone else shares the cost. 
D)  the greater the significance of the end benefit of the purchase. 
E)  the lesser the total expenditure. 
A)  the greater the total expenditure. 
B)  when someone else pays the bill. 
C)  when someone else shares the cost. 
D)  the greater the significance of the end benefit of the purchase. 
E)  the lesser the total expenditure.

Question 6

Setting relatively high prices to suggest high-quality or high-status is:

Accepted Answer

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

Question 7

Walgreens Drugstores advertises that its Tylenol prices are "the lowest in town" in order to stimulate sales of other products along with Tylenol. This is an example of:

Accepted Answer

A)  skimming. 
B)  value in use pricing. 
C)  bait pricing. 
D)  price lining. 
E)  leader pricing. 
A)  skimming. 
B)  value in use pricing. 
C)  bait pricing. 
D)  price lining. 
E)  leader pricing.

Question 8

Online auctions (on the Internet) are becoming very popular as a way to determine how much customers are willing to pay for a product.

Accepted Answer

A) True 
 B)False

Question 9

The quarterly operating statement for a firm gives the following information: Number of pieces manufactured: 100
Number of pieces sold: 100
Total cost of goods sold: $800
Average cost of single piece: $5
Net sales: $1,000
It can be inferred that the firm's gross margin is _____.

Accepted Answer

A)  $92 
B)  $2 
C)  $1800 
D)  $200 
E)  $1818 
A)  $92 
B)  $2 
C)  $1800 
D)  $200 
E)  $1818

Question 10

A low stockturn decreases inventory carrying cost and frees up working capital.

Accepted Answer

A) True 
 B)False

Question 11

Identify the correct statement about the relationships between quantity, cost, and price based on the cost-oriented pricing model.

Accepted Answer

A)  The average total cost is usually obtained by adding the profit per unit to the quantity demanded at selling price. 
B)  Cost-oriented selling price per unit is usually determined by adding the variable cost per unit with the estimated quantity to be sold. 
C)  The estimated total number of units to be sold usually determines the average fixed cost per unit. 
D)  The quantity demanded at selling price is the quantity used to compute the average cost. 
A)  The average total cost is usually obtained by adding the profit per unit to the quantity demanded at selling price. 
B)  Cost-oriented selling price per unit is usually determined by adding the variable cost per unit with the estimated quantity to be sold. 
C)  The estimated total number of units to be sold usually determines the average fixed cost per unit. 
D)  The quantity demanded at selling price is the quantity used to compute the average cost.

Question 12

Competition needs to be considered when adding in overhead and profit for a bid price.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following would NOT be included in a producer's total fixed cost?

Accepted Answer

A)  Rent 
B)  Property taxes 
C)  Insurance 
D)  Depreciation 
E)  Component parts 
A)  Rent 
B)  Property taxes 
C)  Insurance 
D)  Depreciation 
E)  Component parts

Question 14

In order to stand apart, the airline Fly High Air offers low airfares and heavy seasonal discounts. However, it charges its passengers for in-flight meals, water, and baggage service as opposed to its competitors who offer these services for free. Fly High Air is following a(n) _____ pricing strategy.

Accepted Answer

A)  odd-even 
B)  unbundled 
C)  negotiated 
D)  bid 
E)  markup 
A)  odd-even 
B)  unbundled 
C)  negotiated 
D)  bid 
E)  markup

Question 15

Break-even charts usually assume that:

Accepted Answer

A)  total cost and total revenue curves are straight lines. 
B)  profits will grow continually beyond the break-even point. 
C)  the break-even point is reached when total cost just equals total revenue. 
D)  any quantity can be sold at the assumed price. 
E)  All of these are assumptions of break-even charts. 
A)  total cost and total revenue curves are straight lines. 
B)  profits will grow continually beyond the break-even point. 
C)  the break-even point is reached when total cost just equals total revenue. 
D)  any quantity can be sold at the assumed price. 
E)  All of these are assumptions of break-even charts.

Question 16

According to the text, markup (percent) means percentage of cost unless otherwise stated.

Accepted Answer

A) True 
 B)False

Question 17

A supermarket is bound to expect a higher stockturn for fresh fruits and vegetables compared to soaps and detergents.

Accepted Answer

A) True 
 B)False

Question 18

Break-even analysis is particularly accurate because it recognizes that the demand curve is downward sloping.

Accepted Answer

A) True 
 B)False

Question 19

A low stockturn rate

Accepted Answer

A)  is extremely good for profits. 
B)  decreases inventory carrying cost. 
C)  ties up working capital. 
D)  is usually linked with very low markups. 
E)  is typical of fresh fruits and vegetables. 
A)  is extremely good for profits. 
B)  decreases inventory carrying cost. 
C)  ties up working capital. 
D)  is usually linked with very low markups. 
E)  is typical of fresh fruits and vegetables.

Question 20

The idea that people will pay extra for "quality" and status is the idea behind

Accepted Answer

A)  price lining. 
B)  average cost approaches to pricing. 
C)  penetration skimming. 
D)  prestige pricing. 
E)  psychological pricing. 
A)  price lining. 
B)  average cost approaches to pricing. 
C)  penetration skimming. 
D)  prestige pricing. 
E)  psychological pricing.

All customers have the same reference price for the same basic type of purchase.

Even if a firm's average variable cost remains constant per unit, its average cost will increase as output increases.

Each possible price has its own break-even point.

Average-cost pricing means adding a reasonable markup to the total cost of a product.

Customers tend to be more price sensitive

Setting relatively high prices to suggest high-quality or high-status is:

Walgreens Drugstores advertises that its Tylenol prices are "the lowest in town" in order to stimulate sales of other products along with Tylenol. This is an example of:

Online auctions (on the Internet) are becoming very popular as a way to determine how much customers are willing to pay for a product.

The quarterly operating statement for a firm gives the following information: Number of pieces manufactured: 100 Number of pieces sold: 100 Total cost of goods sold: $800 Average cost of single piece: $5 Net sales: $1,000 It can be inferred that the firm's gross margin is _____.

A low stockturn decreases inventory carrying cost and frees up working capital.

Identify the correct statement about the relationships between quantity, cost, and price based on the cost-oriented pricing model.

Competition needs to be considered when adding in overhead and profit for a bid price.

Which of the following would NOT be included in a producer's total fixed cost?

Break-even charts usually assume that:

According to the text, markup (percent) means percentage of cost unless otherwise stated.

A supermarket is bound to expect a higher stockturn for fresh fruits and vegetables compared to soaps and detergents.

Break-even analysis is particularly accurate because it recognizes that the demand curve is downward sloping.

A low stockturn rate

The idea that people will pay extra for "quality" and status is the idea behind

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

All customers have the same reference price for the same basic type of purchase.

Even if a firm's average variable cost remains constant per unit, its average cost will increase as output increases.

Each possible price has its own break-even point.

Average-cost pricing means adding a reasonable markup to the total cost of a product.

Customers tend to be more price sensitive

Setting relatively high prices to suggest high-quality or high-status is:

Walgreens Drugstores advertises that its Tylenol prices are "the lowest in town" in order to stimulate sales of other products along with Tylenol. This is an example of:

Online auctions (on the Internet) are becoming very popular as a way to determine how much customers are willing to pay for a product.

The quarterly operating statement for a firm gives the following information: Number of pieces manufactured: 100 Number of pieces sold: 100 Total cost of goods sold: $800 Average cost of single piece: $5 Net sales: $1,000 It can be inferred that the firm's gross margin is _____.

A low stockturn decreases inventory carrying cost and frees up working capital.

Identify the correct statement about the relationships between quantity, cost, and price based on the cost-oriented pricing model.

Competition needs to be considered when adding in overhead and profit for a bid price.

Which of the following would NOT be included in a producer's total fixed cost?

Break-even charts usually assume that:

According to the text, markup (percent) means percentage of cost unless otherwise stated.

A supermarket is bound to expect a higher stockturn for fresh fruits and vegetables compared to soaps and detergents.

Break-even analysis is particularly accurate because it recognizes that the demand curve is downward sloping.

A low stockturn rate

The idea that people will pay extra for "quality" and status is the idea behind

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