Question 1

Price discrimination is illegal according to the provisions of the Robinson-Patman Act.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following statements would be most likely to be made by a manager with a status quo pricing objective?

Accepted Answer

A)  "A price of $10.00 will penetrate the market." 
B)  "A price of $10.00 will not start a price war with our competitors." 
C)  "A price of $10.00 should maximize profits." 
D)  "A price of $10.00 will provide a 30% return on investment." 
E)  "A price of $10.00 should result in a 9% increase in sales." 
A)  "A price of $10.00 will penetrate the market." 
B)  "A price of $10.00 will not start a price war with our competitors." 
C)  "A price of $10.00 should maximize profits." 
D)  "A price of $10.00 will provide a 30% return on investment." 
E)  "A price of $10.00 should result in a 9% increase in sales."

Question 3

A producer's price level decision is made by the market in:

Accepted Answer

A)  a monopoly. 
B)  pure competition. 
C)  monopolistic competition. 
D)  an oligopoly. 
E)  None of these is a good answer. 
A)  a monopoly. 
B)  pure competition. 
C)  monopolistic competition. 
D)  an oligopoly. 
E)  None of these is a good answer.

Question 4

A rebate is:

Accepted Answer

A)  a temporary discount from the price list. 
B)  a reduction in price to encourage buyers to pay their bills quickly. 
C)  a temporary price cut to attract customers. 
D)  a refund paid to consumers after a purchase. 
E)  a document detailing pricing changes. 
A)  a temporary discount from the price list. 
B)  a reduction in price to encourage buyers to pay their bills quickly. 
C)  a temporary price cut to attract customers. 
D)  a refund paid to consumers after a purchase. 
E)  a document detailing pricing changes.

Question 5

Antidumping laws:

Accepted Answer

A)  protect consumers from the high prices charged by monopolistic foreign producers. 
B)  set the maximum price a foreign producer can charge. 
C)  are used in an effort to control the minimum price of imported products. 
D)  make it illegal for a foreign producer to sell a product at a price level lower than domestic producers. 
E)  force foreign producers to sell below cost if they want to compete with a nation's domestic producers. 
A)  protect consumers from the high prices charged by monopolistic foreign producers. 
B)  set the maximum price a foreign producer can charge. 
C)  are used in an effort to control the minimum price of imported products. 
D)  make it illegal for a foreign producer to sell a product at a price level lower than domestic producers. 
E)  force foreign producers to sell below cost if they want to compete with a nation's domestic producers.

Question 6

Offering a CUMULATIVE quantity discount seeks to:

Accepted Answer

A)  reduce the seller's shipping costs. 
B)  eliminate some marketing function. 
C)  shift some of the storing function to the buyer. 
D)  encourage the buyer to make additional purchases. 
E)  All of these alternatives are correct. 
A)  reduce the seller's shipping costs. 
B)  eliminate some marketing function. 
C)  shift some of the storing function to the buyer. 
D)  encourage the buyer to make additional purchases. 
E)  All of these alternatives are correct.

Question 7

A "skimming pricing policy":

Accepted Answer

A)  should be used if a firm expects strong competition very soon. 
B)  is most useful when demand is very elastic. 
C)  is typically used during the sales decline stage of the product life cycle. 
D)  usually involves a slow reduction in price over time. 
E)  means temporary price cuts to speed new products into a market. 
A)  should be used if a firm expects strong competition very soon. 
B)  is most useful when demand is very elastic. 
C)  is typically used during the sales decline stage of the product life cycle. 
D)  usually involves a slow reduction in price over time. 
E)  means temporary price cuts to speed new products into a market.

Question 8

Pricing objectives and policies should flow from company-level objectives.

Accepted Answer

A) True 
 B)False

Question 9

The Robinson-Patman Act permits promotion allowances only if they are made available to all customers on "proportionately equal terms."

Accepted Answer

A) True 
 B)False

Question 10

When a firm sells through intermediaries, there is little reason to try to administer the price intermediaries charge final consumers.

Accepted Answer

A) True 
 B)False

Question 11

Administered prices are prices agreed to by competing firms in a market.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following observations concerning introductory price dealing is true?

Accepted Answer

A)  Established competitors usually choose to meet introductory price dealing. 
B)  They are temporary price cuts to speed new products into a market. 
C)  They have the same effect as price skimming. 
D)  They are the same as low penetration prices. 
E)  The plan is to sustain the price cut for an extended period of time. 
A)  Established competitors usually choose to meet introductory price dealing. 
B)  They are temporary price cuts to speed new products into a market. 
C)  They have the same effect as price skimming. 
D)  They are the same as low penetration prices. 
E)  The plan is to sustain the price cut for an extended period of time.

Question 13

Unfortunately, no laws prevent a retailer from using a phony list price-to make a consumer think that the price being charged offers a really big discount.

Accepted Answer

A) True 
 B)False

Question 14

Cherokee Cable Corporation, sells heavy wire cable to large construction companies around the country. Customers pay shipping from a central warehouse in Dallas. Recently, a new competitor in Atlanta has been taking away some of Cherokee Cable's southern customers. If Cherokee Cable wants to compete in those distant markets, but not increase the cost of its product to other customers, it would probably switch to

Accepted Answer

A)  zone pricing. 
B)  specifying "F.O.B. Dallas" in its contracts. 
C)  uniform delivered pricing. 
D)  freight absorption pricing. 
E)  None of these would help Cherokee Cable Corporation with its problem. 
A)  zone pricing. 
B)  specifying "F.O.B. Dallas" in its contracts. 
C)  uniform delivered pricing. 
D)  freight absorption pricing. 
E)  None of these would help Cherokee Cable Corporation with its problem.

Question 15

Sears reduces prices on gas grills between November and February, prior to spring and summer. This price reduction is a:

Accepted Answer

A)  stocking allowance. 
B)  seasonal discount. 
C)  noncumulative quantity discount. 
D)  cumulative quantity discount. 
E)  cash discount. 
A)  stocking allowance. 
B)  seasonal discount. 
C)  noncumulative quantity discount. 
D)  cumulative quantity discount. 
E)  cash discount.

Question 16

"Meeting competition" in "good faith" is allowed as a defense in price discrimination situations.

Accepted Answer

A) True 
 B)False

Question 17

The _____ bans "unfair or deceptive acts in commerce."

Accepted Answer

A)  Wheeler-Lea Amendment 
B)  Trade Name Amendment 
C)  Excessive Bail Act 
D)  Excessive Punishment Act 
E)  Emblems Act 
A)  Wheeler-Lea Amendment 
B)  Trade Name Amendment 
C)  Excessive Bail Act 
D)  Excessive Punishment Act 
E)  Emblems Act

Question 18

"Unfair trade practice acts":

Accepted Answer

A)  prohibit very high markups at the retail level. 
B)  allow manufacturers to set retail prices for branded products. 
C)  prohibit price fixing among retailers. 
D)  allow intermediaries to sell below cost. 
E)  protect certain limited-line retailers from "ruinous" price competition. 
A)  prohibit very high markups at the retail level. 
B)  allow manufacturers to set retail prices for branded products. 
C)  prohibit price fixing among retailers. 
D)  allow intermediaries to sell below cost. 
E)  protect certain limited-line retailers from "ruinous" price competition.

Question 19

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."
National Printing Equipment's new Gutenberg NP201 should probably use:

Accepted Answer

A)  price fixing. 
B)  skimming pricing. 
C)  introductory pricing. 
D)  penetration pricing. 
E)  seasonal discounts. 
A)  price fixing. 
B)  skimming pricing. 
C)  introductory pricing. 
D)  penetration pricing. 
E)  seasonal discounts.

Question 20

A one price policy:

Accepted Answer

A)  means offering the same price on all its products irrespective of the manufacturing, designing, and marketing costs. 
B)  means offering the same price to all customers who purchase products under the same conditions and in the same quantities. 
C)  means offering the same price to customers, but the price depends on the store which is selling the product. 
D)  means offering the same price to distributors, retailers, and customers. 
E)  means equating price with the per-unit cost of production. 
A)  means offering the same price on all its products irrespective of the manufacturing, designing, and marketing costs. 
B)  means offering the same price to all customers who purchase products under the same conditions and in the same quantities. 
C)  means offering the same price to customers, but the price depends on the store which is selling the product. 
D)  means offering the same price to distributors, retailers, and customers. 
E)  means equating price with the per-unit cost of production.

Price discrimination is illegal according to the provisions of the Robinson-Patman Act.

Which of the following statements would be most likely to be made by a manager with a status quo pricing objective?

A producer's price level decision is made by the market in:

A rebate is:

Antidumping laws:

Offering a CUMULATIVE quantity discount seeks to:

A "skimming pricing policy":

Pricing objectives and policies should flow from company-level objectives.

The Robinson-Patman Act permits promotion allowances only if they are made available to all customers on "proportionately equal terms."

When a firm sells through intermediaries, there is little reason to try to administer the price intermediaries charge final consumers.

Administered prices are prices agreed to by competing firms in a market.

Which of the following observations concerning introductory price dealing is true?

Unfortunately, no laws prevent a retailer from using a phony list price-to make a consumer think that the price being charged offers a really big discount.

Sears reduces prices on gas grills between November and February, prior to spring and summer. This price reduction is a:

"Meeting competition" in "good faith" is allowed as a defense in price discrimination situations.

The _____ bans "unfair or deceptive acts in commerce."

"Unfair trade practice acts":

A one price policy:

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

Price discrimination is illegal according to the provisions of the Robinson-Patman Act.

Which of the following statements would be most likely to be made by a manager with a status quo pricing objective?

A producer's price level decision is made by the market in:

A rebate is:

Antidumping laws:

Offering a CUMULATIVE quantity discount seeks to:

A "skimming pricing policy":

Pricing objectives and policies should flow from company-level objectives.

The Robinson-Patman Act permits promotion allowances only if they are made available to all customers on "proportionately equal terms."

When a firm sells through intermediaries, there is little reason to try to administer the price intermediaries charge final consumers.

Administered prices are prices agreed to by competing firms in a market.

Which of the following observations concerning introductory price dealing is true?

Unfortunately, no laws prevent a retailer from using a phony list price-to make a consumer think that the price being charged offers a really big discount.

Sears reduces prices on gas grills between November and February, prior to spring and summer. This price reduction is a:

"Meeting competition" in "good faith" is allowed as a defense in price discrimination situations.

The _____ bans "unfair or deceptive acts in commerce."

"Unfair trade practice acts":

A one price policy:

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