Question 1

Seasonal discounts tend to smooth out sales during the year and therefore permit year-round operation.

Accepted Answer

A) True 
 B)False

Question 2

Almost every business transaction in our modern economy involves an exchange of money.

Accepted Answer

A) True 
 B)False

Question 3

The cash discount terms for a purchase worth $1,000 made on August 1 are 3/10, net 30. How much will the buyer have to pay if he makes the payment on August 7?

Accepted Answer

A)  $930 
B)  $30 
C)  $1,030 
D)  $1,000 
E)  $970 
A)  $930 
B)  $30 
C)  $1,030 
D)  $1,000 
E)  $970

Question 4

Advertising allowances offered by producers can be ILLEGAL unless they are made available:

Accepted Answer

A)  for products of "like grade and quality." 
B)  to all customers on proportionately equal terms. 
C)  to all buyers in equal dollar amounts. 
D)  on all products sold by the producer. 
E)  within an FTC approved agreement. 
A)  for products of "like grade and quality." 
B)  to all customers on proportionately equal terms. 
C)  to all buyers in equal dollar amounts. 
D)  on all products sold by the producer. 
E)  within an FTC approved agreement.

Question 5

Sales-oriented pricing objectives don't refer to profit.

Accepted Answer

A) True 
 B)False

Question 6

A pricing objective that seeks a specific level of profit is a:

Accepted Answer

A)  profit maximization objective. 
B)  value objective. 
C)  sales-oriented objective. 
D)  target return objective. 
E)  status quo objective. 
A)  profit maximization objective. 
B)  value objective. 
C)  sales-oriented objective. 
D)  target return objective. 
E)  status quo objective.

Question 7

Sales-oriented objectives stated in market share terms:

Accepted Answer

A)  make some sense when a market is growing rapidly. 
B)  use market share targets instead of dollar or unit sales targets. 
C)  might be achieved and still result in losses for the firm. 
D)  may lead to greater economies of scale for the firm than for its competitors. 
E)  All of these alternatives are correct. 
A)  make some sense when a market is growing rapidly. 
B)  use market share targets instead of dollar or unit sales targets. 
C)  might be achieved and still result in losses for the firm. 
D)  may lead to greater economies of scale for the firm than for its competitors. 
E)  All of these alternatives are correct.

Question 8

Pricing a product sold in a foreign market higher than in its domestic market is referred to as dumping.

Accepted Answer

A) True 
 B)False

Question 9

Flexible pricing is most common in the channels, in direct sales of business products, and at retail for expensive shopping products.

Accepted Answer

A) True 
 B)False

Question 10

Jake's Auto Repair receives an invoice for some equipment he purchased on credit. The full face value of the invoice is to be paid within 60 days. However, if it is paid within 10 days, Jake can take a 6 percent discount off the face value of the invoice. Which of the following notations accurately represents the conditions described above?

Accepted Answer

A)  24/7, net 6 
B)  10/60, net 6 
C)  6/10, net 60 
D)  60/6, net 3 
E)  10/6, net 60 
A)  24/7, net 6 
B)  10/60, net 6 
C)  6/10, net 60 
D)  60/6, net 3 
E)  10/6, net 60

Question 11

Which of the following pricing policies involves entering a market with a single low price and not significantly increasing the price even upon gaining a major market share?

Accepted Answer

A)  Introductory price dealing 
B)  Temporary price cut policy 
C)  Skimming price policy 
D)  Penetration price policy 
E)  Zone pricing policy 
A)  Introductory price dealing 
B)  Temporary price cut policy 
C)  Skimming price policy 
D)  Penetration price policy 
E)  Zone pricing policy

Question 12

A _____ policy means offering the same price to all customers who purchase products under essentially the same conditions and in the same quantities.

Accepted Answer

A)  one-price 
B)  flexible price 
C)  skimming price 
D)  differentiated 
E)  penetration price 
A)  one-price 
B)  flexible price 
C)  skimming price 
D)  differentiated 
E)  penetration price

Question 13

Profit maximization objectives lead to high prices and monopolies-and are generally not in the public interest.

Accepted Answer

A) True 
 B)False

Question 14

Any business transaction can be thought of as an exchange of "something of value" for money-where money is the price.

Accepted Answer

A) True 
 B)False

Question 15

When the total market is not growing a common strategy adopted is to stabilize prices.

Accepted Answer

A) True 
 B)False

Question 16

Use this information for question that refer to the Pricing 1 case. (WPI) case. As a project for her marketing class, Emily Washington is researching how five local businesses price their products. The following are brief sketches of what she has learned about each company.
At Bella Computers, Emily has discovered that the company earned a 6 percent return on investment this year and wants to increase it to 9 percent next year. To its retailer customers, Bella Computers gives cash discount terms of 2/10, net 30. It also gives retailers a 3% reduction on the invoice amount for advertising Bella products locally. Bella gives retailers' salespeople 2% of the sale price for each Bella Computer they sell.
At Ross Pharmaceuticals, she learned that the company has invested heavily in developing a new product that recently received a patent. Because cash is tight, the company wants to achieve a rapid return on its investment. The new patented product is badly needed in the market, so a very inelastic demand curve is expected.
Digital Imaging makes photographic prints for wedding photographers. It is very concerned about competitor reactions to its pricing, so it has selected prices that will not draw the attention of the competition and not start a price war. Digital Imaging offers customers an 8% discount if their purchases exceed $20,000 a year.
Jack's One Hour Cleaners recently opened for business. The company invested a lot of money in new equipment, and feels that it has to quickly get "at least 10% market share to stay in the game." This need obviously influences the company's pricing decisions. Jack's also plans to offer customers 20% discounts on any order over $20.
National Printing Equipment (NPE) produces equipment that helps to print newspapers and magazines. The company sells directly to printers and through wholesalers. Its salespeople negotiate prices with individual customers and often have to match competitors' prices. NPE has a new product, the Gutenberg NP201, with some competitive advantages now, but competitors are expected to follow quickly with similar products. The new product is being introduced into a market with elastic demand. Regarding freight charges for its equipment, NPE's invoice reads, "Seller pays the cost of loading equipment onto a common carrier. At the point of loading, title to such products passes to the buyer, who assumes responsibility for damage in transit, except as covered by the transportation agency."
If one of Bella Computers' retail customers did not pay the invoice for 30 days, the customer would - in effect - be borrowing at what annual interest rate?

Accepted Answer

A)  9 percent 
B)  18 percent 
C)  27 percent 
D)  36 percent 
E)  72 percent 
A)  9 percent 
B)  18 percent 
C)  27 percent 
D)  36 percent 
E)  72 percent

Question 17

A seasonal discount encourages buyers to stock products earlier than present demand requires.

Accepted Answer

A) True 
 B)False

Question 18

An installment involves a single transaction.

Accepted Answer

A) True 
 B)False

Question 19

The exchange rate affects what is a competitive price for products sold in international markets, but not local markets.

Accepted Answer

A) True 
 B)False

Question 20

"Price fixing" means:

Accepted Answer

A)  changing a price that was set at the wrong level by the financial manager. 
B)  pricing a product that will be sold in a foreign market at a level below the cost of production. 
C)  selling products of like grade and quality to different buyers at different prices. 
D)  a firm consciously setting its prices. 
E)  competitors getting together to raise, lower, or stabilize prices. 
A)  changing a price that was set at the wrong level by the financial manager. 
B)  pricing a product that will be sold in a foreign market at a level below the cost of production. 
C)  selling products of like grade and quality to different buyers at different prices. 
D)  a firm consciously setting its prices. 
E)  competitors getting together to raise, lower, or stabilize prices.

Seasonal discounts tend to smooth out sales during the year and therefore permit year-round operation.

Almost every business transaction in our modern economy involves an exchange of money.

The cash discount terms for a purchase worth $1,000 made on August 1 are 3/10, net 30. How much will the buyer have to pay if he makes the payment on August 7?

Advertising allowances offered by producers can be ILLEGAL unless they are made available:

Sales-oriented pricing objectives don't refer to profit.

A pricing objective that seeks a specific level of profit is a:

Sales-oriented objectives stated in market share terms:

Pricing a product sold in a foreign market higher than in its domestic market is referred to as dumping.

Flexible pricing is most common in the channels, in direct sales of business products, and at retail for expensive shopping products.

Which of the following pricing policies involves entering a market with a single low price and not significantly increasing the price even upon gaining a major market share?

A _____ policy means offering the same price to all customers who purchase products under essentially the same conditions and in the same quantities.

Profit maximization objectives lead to high prices and monopolies-and are generally not in the public interest.

Any business transaction can be thought of as an exchange of "something of value" for money-where money is the price.

When the total market is not growing a common strategy adopted is to stabilize prices.

A seasonal discount encourages buyers to stock products earlier than present demand requires.

An installment involves a single transaction.

The exchange rate affects what is a competitive price for products sold in international markets, but not local markets.

"Price fixing" means:

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

Price Setting in the Business World

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

Filters

Exam 16: Pricing Objectives and Policies

Seasonal discounts tend to smooth out sales during the year and therefore permit year-round operation.

Almost every business transaction in our modern economy involves an exchange of money.

The cash discount terms for a purchase worth $1,000 made on August 1 are 3/10, net 30. How much will the buyer have to pay if he makes the payment on August 7?

Advertising allowances offered by producers can be ILLEGAL unless they are made available:

Sales-oriented pricing objectives don't refer to profit.

A pricing objective that seeks a specific level of profit is a:

Sales-oriented objectives stated in market share terms:

Pricing a product sold in a foreign market higher than in its domestic market is referred to as dumping.

Flexible pricing is most common in the channels, in direct sales of business products, and at retail for expensive shopping products.

Which of the following pricing policies involves entering a market with a single low price and not significantly increasing the price even upon gaining a major market share?

A _____ policy means offering the same price to all customers who purchase products under essentially the same conditions and in the same quantities.

Profit maximization objectives lead to high prices and monopolies-and are generally not in the public interest.

Any business transaction can be thought of as an exchange of "something of value" for money-where money is the price.

When the total market is not growing a common strategy adopted is to stabilize prices.

A seasonal discount encourages buyers to stock products earlier than present demand requires.

An installment involves a single transaction.

The exchange rate affects what is a competitive price for products sold in international markets, but not local markets.

"Price fixing" means:

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

Price Setting in the Business World

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

Filters