Exam 18: Pricing Concepts

Overall organizational objectives and more specific marketing objectives guide the development of pricing objectives,which in turn lead to the development and implementation of more specific pricing policies and procedures.

The Miller-Tydings Resale Price Maintenance Act (1937)exempted interstate fair-trade contracts from compliance with antitrust requirements,thus freeing states to keep these laws on their books if they so desired.

A profit-maximizing price rises to the point at which further increases will cause disproportionate decreases in the number of units sold.

The price elasticity of demand (or elasticity of demand)is the percentage change in the quantity of a good or service demanded divided by the percentage change in its price.

The price elasticity of supply of a product is the percentage change in the quantity of a good or service supplied divided by the percentage change in its price.

Mignon d'Armitage manufactures jewelry.This firm is planning to introduce a new necklace and is trying to determine how many units it must sell in order to break even.Fixed costs are $100,000 and variable costs for each unit will be $20.At the price of $45 each,the number of units that must be sold in order to break even is:

The basic breakeven model addresses the question of whether customers will actually purchase the product at the specified price in the quantity required to break even or make a profit.

What are the practical problems involved in applying price theory concepts to actual pricing decision?

The price of products only includes the costs incurred by the manufacturer for procuring the raw material and for processing the products.

Which of the following is true of fair-trade laws?

The two most common cost-oriented pricing procedures are the full-cost method and the incremental- cost method.

Explain customary prices.

The demand side of the pricing equation focuses on:

What are some of the organizational goals that pricing strategies can help not-for-profit organizations achieve?

The breakeven point is the point at which:

In which of the following market structures the entry of new firms into the industry is regulated by the government?

A market structure characterized by homogeneous products in which there are so many buyers and sellers that none has a significant influence on price is known as _____.

A pricing method,that uses all relevant variable costs in setting a product's price and allocates those fixed costs that cannot be directly attributed to the production of the priced item,is known as _____.

Which of the following is true of pure competition?

A 5 percent increase in the price of corn flour that results in a 15 percent increase in the quantity supplied yields a price elasticity of supply for corn flour of: