Question 1

Average fixed costs:

Accepted Answer

A)  increase as the quantity produced increases. 
B)  decline for a while as output increases and then begin to rise again. 
C)  decrease steadily as output increases. 
D)  are less than average variable costs at all output levels. 
E)  None of these alternatives is correct. 
A)  increase as the quantity produced increases. 
B)  decline for a while as output increases and then begin to rise again. 
C)  decrease steadily as output increases. 
D)  are less than average variable costs at all output levels. 
E)  None of these alternatives is correct.

Question 2

A firm is looking to construct a new office. It puts out a request for proposals from contractors inviting their price quotations given certain defined specifications. This is an example of:

Accepted Answer

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

Question 3

"Full-line pricing" is setting prices for a whole line of products.

Accepted Answer

A) True 
 B)False

Question 4

A company that produces baseball caps has fixed costs of $100,000, total variable costs of $40,000 for a production volume of 20,000 units. The average variable cost per unit is:

Accepted Answer

A)  $5.00. 
B)  $2.50. 
C)  $0.20. 
D)  $0.40. 
E)  $2.00. 
A)  $5.00. 
B)  $2.50. 
C)  $0.20. 
D)  $0.40. 
E)  $2.00.

Question 5

Regarding markups and turnover:

Accepted Answer

A)  supermarket operators have found that high-margin products are generally more profitable than low-margin products. 
B)  higher markups always lead to higher profits. 
C)  low stockturn rates increase costs by tying up working capital in inventory. 
D)  to earn higher profits, all firms should lower their markups and seek faster turnover. 
E)  None of these alternatives is correct. 
A)  supermarket operators have found that high-margin products are generally more profitable than low-margin products. 
B)  higher markups always lead to higher profits. 
C)  low stockturn rates increase costs by tying up working capital in inventory. 
D)  to earn higher profits, all firms should lower their markups and seek faster turnover. 
E)  None of these alternatives is correct.

Question 6

The sole objective of leader pricing is to sell large quantities of the leader items.

Accepted Answer

A) True 
 B)False

Question 7

A retailer buys a particular product for $4. To make a profit, the retailer adds $2 to cover operating expenses and provide a profit. The percentage markup on the $6 selling price is

Accepted Answer

A)  50 percent. 
B)  33.33 percent. 
C)  100 percent. 
D)  20 percent. 
E)  25 percent. 
A)  50 percent. 
B)  33.33 percent. 
C)  100 percent. 
D)  20 percent. 
E)  25 percent.

Question 8

A disadvantage of average-cost pricing is that it

Accepted Answer

A)  does not consider historical values. 
B)  is a highly complicated method of pricing. 
C)  is rarely a useful input to pricing decisions. 
D)  is easy to lose money with average-cost pricing. 
E)  does not help understand how costs operate at different levels of output. 
A)  does not consider historical values. 
B)  is a highly complicated method of pricing. 
C)  is rarely a useful input to pricing decisions. 
D)  is easy to lose money with average-cost pricing. 
E)  does not help understand how costs operate at different levels of output.

Question 9

Price lining tends to result in faster turnover, fewer markdowns, quicker sales, and simplified buying.

Accepted Answer

A) True 
 B)False

Question 10

A college "marketing club" printed 1,000 "We're Number 1" bumper stickers for sale at $3.00 each as a fund-raiser. Its fixed costs were $500, and the variable cost for each sticker was $.50. The club's average cost per unit was:

Accepted Answer

A)  $2.00. 
B)  $2.50. 
C)  $0.50. 
D)  $1.00. 
E)  There is not enough information to tell. 
A)  $2.00. 
B)  $2.50. 
C)  $0.50. 
D)  $1.00. 
E)  There is not enough information to tell.

Question 11

Regarding "full-line pricing," which of the following statements is TRUE?

Accepted Answer

A)  A good marketing manager usually tries to price products in a line so that the prices will seem logically related and make sense to target customers. 
B)  The marketing manager should try to cover all costs on the whole product line. 
C)  Most customers seem to feel that prices in a product line should be somewhat related to cost. 
D)  Not all companies that make a line of products must use full-line pricing. 
E)  All of these statements about "full-line pricing" are TRUE. 
A)  A good marketing manager usually tries to price products in a line so that the prices will seem logically related and make sense to target customers. 
B)  The marketing manager should try to cover all costs on the whole product line. 
C)  Most customers seem to feel that prices in a product line should be somewhat related to cost. 
D)  Not all companies that make a line of products must use full-line pricing. 
E)  All of these statements about "full-line pricing" are TRUE.

Question 12

Total cost:

Accepted Answer

A)  increases directly with increases in total variable cost. 
B)  is zero at zero output. 
C)  is fixed in total no matter how much is produced. 
D)  increases directly with increases in total fixed cost. 
E)  None of these alternatives is correct. 
A)  increases directly with increases in total variable cost. 
B)  is zero at zero output. 
C)  is fixed in total no matter how much is produced. 
D)  increases directly with increases in total fixed cost. 
E)  None of these alternatives is correct.

Question 13

If Macy's department store prices its men's ties at $10 intervals between $38 and $68, this is an example of:

Accepted Answer

A)  Reference pricing 
B)  Price lining 
C)  Bundle pricing 
D)  Leader pricing 
E)  Bait pricing 
A)  Reference pricing 
B)  Price lining 
C)  Bundle pricing 
D)  Leader pricing 
E)  Bait pricing

Question 14

Regarding pricing:

Accepted Answer

A)  the use of prestige and psychological pricing shows that most retailers do not consider demand when setting prices. 
B)  bait pricing tries to attract customers on the high end of a demand curve. 
C)  the FTC considers bait pricing a deceptive act and has banned its use in interstate commerce. 
D)  leader-priced items are priced very low to get customers into the store-not to sell these items. 
E)  All of these alternatives are correct. 
A)  the use of prestige and psychological pricing shows that most retailers do not consider demand when setting prices. 
B)  bait pricing tries to attract customers on the high end of a demand curve. 
C)  the FTC considers bait pricing a deceptive act and has banned its use in interstate commerce. 
D)  leader-priced items are priced very low to get customers into the store-not to sell these items. 
E)  All of these alternatives are correct.

Question 15

Which of the following observations is false?

Accepted Answer

A)  Competition needs to be considered when adding in overhead and profit for a bid price. 
B)  Some sellers fake their records to make costs seem higher than they really are. 
C)  Negotiated price is a price set based on bargaining between the buyer and seller. 
D)  Negotiated pricing is rare in situations where the marketing mix is adjusted for each customer. 
E)  Negotiated pricing is a demand-oriented approach. 
A)  Competition needs to be considered when adding in overhead and profit for a bid price. 
B)  Some sellers fake their records to make costs seem higher than they really are. 
C)  Negotiated price is a price set based on bargaining between the buyer and seller. 
D)  Negotiated pricing is rare in situations where the marketing mix is adjusted for each customer. 
E)  Negotiated pricing is a demand-oriented approach.

Question 16

Blue Ridge Weavers wants to set its selling price on an item so that the retail list price will be $50-taking into account the usual markups of 10 percent at wholesale and 30 percent at retail. At what price should Blue Ridge Weavers sell the item?

Accepted Answer

A)  $32.50 
B)  $31.50 
C)  $35.00 
D)  $34.00 
E)  $38.00 
A)  $32.50 
B)  $31.50 
C)  $35.00 
D)  $34.00 
E)  $38.00

Question 17

Which of the following is a TRUE statement about markups?

Accepted Answer

A)  A firm can lose money even when using a high markup. 
B)  Markup percents are computed as a percent of the cost of the product. 
C)  It's easier for a producer to administer the prices consumers pay for products if the markup used varies from one intermediary to the next. 
D)  The lower the markup, the lower the profit. 
E)  None of these statements about markups is true. 
A)  A firm can lose money even when using a high markup. 
B)  Markup percents are computed as a percent of the cost of the product. 
C)  It's easier for a producer to administer the prices consumers pay for products if the markup used varies from one intermediary to the next. 
D)  The lower the markup, the lower the profit. 
E)  None of these statements about markups is true.

Question 18

Which of the following costs do not change with an increase in output?

Accepted Answer

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

Question 19

It makes sense for a manager to use leader pricing on a product only if consumers are unlikely to be aware of the normal price.

Accepted Answer

A) True 
 B)False

Question 20

At zero output, total variable cost is

Accepted Answer

A)  higher than total fixed cost. 
B)  equal to total fixed cost. 
C)  unity. 
D)  zero. 
E)  substantial. 
A)  higher than total fixed cost. 
B)  equal to total fixed cost. 
C)  unity. 
D)  zero. 
E)  substantial.

Average fixed costs:

A firm is looking to construct a new office. It puts out a request for proposals from contractors inviting their price quotations given certain defined specifications. This is an example of:

"Full-line pricing" is setting prices for a whole line of products.

A company that produces baseball caps has fixed costs of $100,000, total variable costs of $40,000 for a production volume of 20,000 units. The average variable cost per unit is:

Regarding markups and turnover:

The sole objective of leader pricing is to sell large quantities of the leader items.

A retailer buys a particular product for $4. To make a profit, the retailer adds $2 to cover operating expenses and provide a profit. The percentage markup on the $6 selling price is

A disadvantage of average-cost pricing is that it

Price lining tends to result in faster turnover, fewer markdowns, quicker sales, and simplified buying.

A college "marketing club" printed 1,000 "We're Number 1" bumper stickers for sale at $3.00 each as a fund-raiser. Its fixed costs were $500, and the variable cost for each sticker was $.50. The club's average cost per unit was:

Regarding "full-line pricing," which of the following statements is TRUE?

Total cost:

If Macy's department store prices its men's ties at $10 intervals between $38 and $68, this is an example of:

Regarding pricing:

Which of the following observations is false?

Blue Ridge Weavers wants to set its selling price on an item so that the retail list price will be $50-taking into account the usual markups of 10 percent at wholesale and 30 percent at retail. At what price should Blue Ridge Weavers sell the item?

Which of the following is a TRUE statement about markups?

Which of the following costs do not change with an increase in output?

It makes sense for a manager to use leader pricing on a product only if consumers are unlikely to be aware of the normal price.

At zero output, total variable cost is

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

Average fixed costs:

A firm is looking to construct a new office. It puts out a request for proposals from contractors inviting their price quotations given certain defined specifications. This is an example of:

"Full-line pricing" is setting prices for a whole line of products.

A company that produces baseball caps has fixed costs of $100,000, total variable costs of $40,000 for a production volume of 20,000 units. The average variable cost per unit is:

Regarding markups and turnover:

The sole objective of leader pricing is to sell large quantities of the leader items.

A retailer buys a particular product for $4. To make a profit, the retailer adds $2 to cover operating expenses and provide a profit. The percentage markup on the $6 selling price is

A disadvantage of average-cost pricing is that it

Price lining tends to result in faster turnover, fewer markdowns, quicker sales, and simplified buying.

A college "marketing club" printed 1,000 "We're Number 1" bumper stickers for sale at $3.00 each as a fund-raiser. Its fixed costs were $500, and the variable cost for each sticker was $.50. The club's average cost per unit was:

Regarding "full-line pricing," which of the following statements is TRUE?

Total cost:

If Macy's department store prices its men's ties at $10 intervals between $38 and $68, this is an example of:

Regarding pricing:

Which of the following observations is false?

Blue Ridge Weavers wants to set its selling price on an item so that the retail list price will be $50-taking into account the usual markups of 10 percent at wholesale and 30 percent at retail. At what price should Blue Ridge Weavers sell the item?

Which of the following is a TRUE statement about markups?

Which of the following costs do not change with an increase in output?

It makes sense for a manager to use leader pricing on a product only if consumers are unlikely to be aware of the normal price.

At zero output, total variable cost is

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