Question 1

Identify and briefly describe the legal constraints placed on pricing.

Accepted Answer

1.The Robinson-Patman Act is a federal l

Question 2

_____ is the measure of the responsiveness of purchasers and suppliers to price changes.

Accepted Answer

A) breakeven analysis 
B) tariffs 
C) unfair-trade laws 
D) incremental-cost pricing 
E) profit maximization
F)demand
G)value pricing
H)monopoly
I)elasticity
J)marginal
K)fair-trade laws
L)yield management
M)oligopoly
N)cost-plus pricing
O)full-cost pricing
P)supply
Q)marginal analysis
R)target-return objectives
S)market-share objectives
T)pure competition 
A) breakeven analysis 
B) tariffs 
C) unfair-trade laws 
D) incremental-cost pricing 
E) profit maximization
F)demand
G)value pricing
H)monopoly
I)elasticity
J)marginal
K)fair-trade laws
L)yield management
M)oligopoly
N)cost-plus pricing
O)full-cost pricing
P)supply
Q)marginal analysis
R)target-return objectives
S)market-share objectives
T)pure competition

Question 3

A company incurs fixed costs of $35,000 and average variable costs of $7 per item.This company sells 10,000 units and just breaks even.The unit selling price for the product is:

Accepted Answer

A)  $10.00 
B)  $7.35 
C)  $17.00 
D)  $10.50 
A)  $10.00 
B)  $7.35 
C)  $17.00 
D)  $10.50

Question 4

When most of a firm's costs are variable over a wide range of outputs,the primary determinant of profitability will be the revenue generated by sales.

Accepted Answer

A) True 
 B)False

Question 5

The ticket reselling market is both highly fragmented and susceptible to fraud and distorted pricing.

Accepted Answer

A) True 
 B)False

Question 6

The supply side of the pricing equation focuses on revenue curves.

Accepted Answer

A) True 
 B)False

Question 7

A profit-maximizing price rises to the point at which further:

Accepted Answer

A)  increases will cause proportionate decreases in the number of units sold. 
B)  decreases will cause disproportionate decreases in the number of units sold. 
C)  increases will cause disproportionate decreases in the number of units sold. 
D)  increases will cause disproportionate increases in the number of units sold. 
A)  increases will cause proportionate decreases in the number of units sold. 
B)  decreases will cause disproportionate decreases in the number of units sold. 
C)  increases will cause disproportionate decreases in the number of units sold. 
D)  increases will cause disproportionate increases in the number of units sold.

Question 8

Marketers determine prices in two basic ways: by applying the theoretical concepts of supply and demand and by completing cost-oriented analyses.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following can be categorized as a tariff?

Accepted Answer

A)  A tax exemption provided to domestic firms that import goods from foreign countries. 
B)  A tax levied on domestic exporters to maintain product quality. 
C)  A tax levied on foreign producers to prevent dumping of goods. 
D)  A tax exemption on agricultural produce to help domestic farmers. 
A)  A tax exemption provided to domestic firms that import goods from foreign countries. 
B)  A tax levied on domestic exporters to maintain product quality. 
C)  A tax levied on foreign producers to prevent dumping of goods. 
D)  A tax exemption on agricultural produce to help domestic farmers.

Question 10

All firms attempt to maximize profits.

Accepted Answer

A) True 
 B)False

Question 11

Prestige pricing establishes a relatively high price to develop and maintain an image of quality and exclusiveness that appeals to status-conscious consumers.

Accepted Answer

A) True 
 B)False

Question 12

The method of analyzing the relationship among costs,sales price,and increased sales volume is called _____.

Accepted Answer

A) breakeven analysis 
B) tariffs 
C) unfair-trade laws 
D) incremental-cost pricing 
E) profit maximization
F)demand
G)value pricing
H)monopoly
I)elasticity
J)marginal
K)fair-trade laws
L)yield management
M)oligopoly
N)cost-plus pricing
O)full-cost pricing
P)supply
Q)marginal analysis
R)target-return objectives
S)market-share objectives
T)pure competition 
A) breakeven analysis 
B) tariffs 
C) unfair-trade laws 
D) incremental-cost pricing 
E) profit maximization
F)demand
G)value pricing
H)monopoly
I)elasticity
J)marginal
K)fair-trade laws
L)yield management
M)oligopoly
N)cost-plus pricing
O)full-cost pricing
P)supply
Q)marginal analysis
R)target-return objectives
S)market-share objectives
T)pure competition

Question 13

A major assumption of the economic theory is that,firms will focus on:

Accepted Answer

A)  minimizing the inventory turnover ratio. 
B)  maximizing gains and minimizing losses. 
C)  providing a minimum return on investment. 
D)  using selective distribution strategies rather than intensive distribution strategies. 
A)  minimizing the inventory turnover ratio. 
B)  maximizing gains and minimizing losses. 
C)  providing a minimum return on investment. 
D)  using selective distribution strategies rather than intensive distribution strategies.

Question 14

The Robinson-Patman Act specifically prohibits:

Accepted Answer

A)  imposing taxes on the products that are being exported to other countries. 
B)  earning excess profits, that is, more than the average for an industry. 
C)  price discrimination in sales to wholesalers, retailers, and other producers. 
D)  charging the same price to everyone for everything you sell. 
A)  imposing taxes on the products that are being exported to other countries. 
B)  earning excess profits, that is, more than the average for an industry. 
C)  price discrimination in sales to wholesalers, retailers, and other producers. 
D)  charging the same price to everyone for everything you sell.

Question 15

A demand is said to be inelastic when the:

Accepted Answer

A)  demand curve and the supply curve do not intersect. 
B)  total cost and total revenue are equal at all levels of demand. 
C)  elasticity of demand is less than 1. 
D)  elasticity of demand is greater than 1. 
A)  demand curve and the supply curve do not intersect. 
B)  total cost and total revenue are equal at all levels of demand. 
C)  elasticity of demand is less than 1. 
D)  elasticity of demand is greater than 1.

Question 16

In an oligopolistic market,price cutting is likely to increase total industry revenues.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following is true of the Robinson-Patman Act?

Accepted Answer

A)  It prohibited imposing taxes on the products that are being exported to other countries. 
B)  It was intended primarily to create more jobs in grocery chain stores. 
C)  It prohibited selling at an unreasonably low price to eliminate competition. 
D)  It applies only to price discrimination between geographic areas, injuring local sellers. 
A)  It prohibited imposing taxes on the products that are being exported to other countries. 
B)  It was intended primarily to create more jobs in grocery chain stores. 
C)  It prohibited selling at an unreasonably low price to eliminate competition. 
D)  It applies only to price discrimination between geographic areas, injuring local sellers.

Question 18

Which of the following is an example of a volume pricing objective?

Accepted Answer

A)  A value-pricing objective 
B)  A profit maximization objective 
C)  A market-share objective 
D)  A target-return objective 
A)  A value-pricing objective 
B)  A profit maximization objective 
C)  A market-share objective 
D)  A target-return objective

Question 19

Sunshine Cereals has been in the market for seven decades.They attribute their success to maintaining an almost stable product price in the face of inflation as well as stiff competition from rival firms.The management at Sunshine Cereals knows that any substantial increase in product price would translate into loss of sales as consumers are used to paying a specific price for their cereals.This specific price is an example of (a):

Accepted Answer

A)  customary price. 
B)  value price. 
C)  full-cost price. 
D)  incremental-cost price. 
A)  customary price. 
B)  value price. 
C)  full-cost price. 
D)  incremental-cost price.

Question 20

Which of the following exempted interstate fair-trade contracts from compliance with antitrust requirements,thus freeing states to keep these laws on their books if they so desired?

Accepted Answer

A)  The Clayton Act of 1914 
B)  The Robinson-Patman Act of 1936 
C)  The Miller-Tydings Resale Price Maintenance Act of 1937 
D)  The Consumer Goods Pricing Act of 1975 
A)  The Clayton Act of 1914 
B)  The Robinson-Patman Act of 1936 
C)  The Miller-Tydings Resale Price Maintenance Act of 1937 
D)  The Consumer Goods Pricing Act of 1975

Exam 18: Pricing Concepts

Identify and briefly describe the legal constraints placed on pricing.

_____ is the measure of the responsiveness of purchasers and suppliers to price changes.

A company incurs fixed costs of $35,000 and average variable costs of $7 per item.This company sells 10,000 units and just breaks even.The unit selling price for the product is:

When most of a firm's costs are variable over a wide range of outputs,the primary determinant of profitability will be the revenue generated by sales.

The ticket reselling market is both highly fragmented and susceptible to fraud and distorted pricing.

The supply side of the pricing equation focuses on revenue curves.

A profit-maximizing price rises to the point at which further:

Marketers determine prices in two basic ways: by applying the theoretical concepts of supply and demand and by completing cost-oriented analyses.

Which of the following can be categorized as a tariff?

All firms attempt to maximize profits.

Prestige pricing establishes a relatively high price to develop and maintain an image of quality and exclusiveness that appeals to status-conscious consumers.

The method of analyzing the relationship among costs,sales price,and increased sales volume is called _____.

A major assumption of the economic theory is that,firms will focus on:

The Robinson-Patman Act specifically prohibits:

A demand is said to be inelastic when the:

In an oligopolistic market,price cutting is likely to increase total industry revenues.

Which of the following is true of the Robinson-Patman Act?

Which of the following is an example of a volume pricing objective?

Which of the following exempted interstate fair-trade contracts from compliance with antitrust requirements,thus freeing states to keep these laws on their books if they so desired?

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