Question 1

In general, prices should not be based on costs because

Accepted Answer

A)  consumers are cost-conscious. 
B)  producers rarely know what their costs are. 
C)  consumers make their purchase decisions based on perceived value. 
D)  producers need to avoid creating a cost competitive parity debate. 
E)  customers are always right. 
A)  consumers are cost-conscious. 
B)  producers rarely know what their costs are. 
C)  consumers make their purchase decisions based on perceived value. 
D)  producers need to avoid creating a cost competitive parity debate. 
E)  customers are always right.

Question 2

The point at which the number of units sold generates enough revenue to equal the total costs of running an operation is known as the

Accepted Answer

A)  contribution per unit. 
B)  fixed cost margin. 
C)  break-even point. 
D)  unit cost. 
E)  marginal revenue. 
A)  contribution per unit. 
B)  fixed cost margin. 
C)  break-even point. 
D)  unit cost. 
E)  marginal revenue.

Question 3

Ryan gave the manager of his convenience store a set of binoculars so she could see the gasoline prices charged by the other convenience store at that intersection. Ryan told the manager to always match the gasoline prices of the other store. Ryan is using a _____________________ pricing strategy.

Accepted Answer

A)  maximizing profits 
B)  target profit 
C)  target return 
D)  status quo 
E)  sales 
A)  maximizing profits 
B)  target profit 
C)  target return 
D)  status quo 
E)  sales

Question 4

Why is it more fun and challenging for a marketer to be part of a market characterized by monopolistic competition than be part of one characterized by pure competition?

Accepted Answer

In pure competition, all products are si

Question 5

Traditional demand curve economic theory is used by marketers to understand _______________ in the five Cs of pricing.

Accepted Answer

A)  competitors 
B)  channel members 
C)  cost 
D)  customers 
E)  company objectives 
A)  competitors 
B)  channel members 
C)  cost 
D)  customers 
E)  company objectives

Question 6

The Robinson-Patman Act does NOT apply to end consumers, at which point many forms of price discrimination occur.

Accepted Answer

A) True 
 B)False

Question 7

Margaret has been invited to a fancy dinner party and wants to bring a good bottle of wine as a gift for the host. Since she does not know much about wine, she will likely use the price of the wines as

Accepted Answer

A)  an indicator of quality. 
B)  a reflection of status quo pricing. 
C)  an indicator of the variety. 
D)  a measure of scarcity. 
E)  a measure of the income effect. 
A)  an indicator of quality. 
B)  a reflection of status quo pricing. 
C)  an indicator of the variety. 
D)  a measure of scarcity. 
E)  a measure of the income effect.

Question 8

Cross-price elasticity is the

Accepted Answer

A)  percentage change in quantity of a product demanded divided by the percentage change in its price. 
B)  percentage change in quantity demanded of product A compared to the percentage change in price of product B. 
C) change in price of product A divided by change in quantity demanded for product B. 
D) change in quantity of a product demanded divided by the change in its price. 
E) change in quantity of a product demanded divided by the change in its elasticity. 
A)  percentage change in quantity of a product demanded divided by the percentage change in its price. 
B)  percentage change in quantity demanded of product A compared to the percentage change in price of product B. 
C) change in price of product A divided by change in quantity demanded for product B. 
D) change in quantity of a product demanded divided by the change in its price. 
E) change in quantity of a product demanded divided by the change in its elasticity.

Question 9

A _________________ strategy involves accurately measuring all the factors needed to predict sales and profits at various price levels, so that the price level that produces the highest return can be chosen.

Accepted Answer

A)  sales orientation 
B)  target profit 
C)  target return 
D)  status quo 
E)  maximizing profits 
A)  sales orientation 
B)  target profit 
C)  target return 
D)  status quo 
E)  maximizing profits

Question 10

Why are price wars more common in oligopolies than in pure competition markets?

Accepted Answer

In oligopolies, there are only a few fir

Question 11

__________ price fixing occurs when competitors collude to control prices, and __________ price fixing occurs within a marketing channel to control prices passed on to consumers.

Accepted Answer

A)  Industry; supply chain 
B)  General; specific 
C)  Widespread; integrated 
D)  Strategic; tactical 
E)  Horizontal; vertical 
A)  Industry; supply chain 
B)  General; specific 
C)  Widespread; integrated 
D)  Strategic; tactical 
E)  Horizontal; vertical

Question 12

The demand curve for prestige products generally slopes downward due to higher prices.

Accepted Answer

A) True 
 B)False

Question 13

The observation that consumers are generally more sensitive to price increases than to price decreases suggests that

Accepted Answer

A)  most consumers cannot remember what price they paid the last time they bought a particular product. 
B)  it is easier to lose customers with a price increase than to gain customers with a price decrease. 
C)  most consumers would rather skip buying a product than pay a higher price. 
D)  most consumers are emotionally attached to their favorite products and are unlikely to change, even if the price changes. 
E)  firms gain more customers with price decreases than they lose with price increases. 
A)  most consumers cannot remember what price they paid the last time they bought a particular product. 
B)  it is easier to lose customers with a price increase than to gain customers with a price decrease. 
C)  most consumers would rather skip buying a product than pay a higher price. 
D)  most consumers are emotionally attached to their favorite products and are unlikely to change, even if the price changes. 
E)  firms gain more customers with price decreases than they lose with price increases.

Question 14

Bill desperately needed tires for his car, and he found an ad with an incredibly low price. When he got there, he found out that those had been sold out, and he was pressured into buying tires that were more expensive than he wanted. Bill found out later that Marcelo had had the same experience at the store a few weeks earlier. It's quite possible that both Bill and Marcelo had become the victim of a deceptive pricing tactic known as

Accepted Answer

A)  loss leader pricing. 
B)  desperation selling. 
C)  bait and switch. 
D)  off-season deceptions. 
E)  inventory reduction pricing. 
A)  loss leader pricing. 
B)  desperation selling. 
C)  bait and switch. 
D)  off-season deceptions. 
E)  inventory reduction pricing.

Question 15

If a firm is engaged in monopolistic competition, it should seek a way to differentiate itself.

Accepted Answer

A) True 
 B)False

Question 16

Naomi tells her sales representatives the goal is to generate at least a 20 percent return on investment for all of the industrial building supplies they sell. Naomi is using a _______________ pricing strategy.

Accepted Answer

A)  sales orientation 
B)  target profit 
C)  target return 
D)  status quo 
E)  competitive parity 
A)  sales orientation 
B)  target profit 
C)  target return 
D)  status quo 
E)  competitive parity

Question 17

The major objectives associated with a market penetration pricing strategy are to

Accepted Answer

A)  capture the high end of the market demand curve and lower introduction costs. 
B)  quickly build sales and market share. 
C)  minimize customer dissatisfaction and maximize reference price value. 
D)  provide an incentive to purchase a less desirable product to obtain a more desirable product. 
E)  match competitors' prices and communicate high quality. 
A)  capture the high end of the market demand curve and lower introduction costs. 
B)  quickly build sales and market share. 
C)  minimize customer dissatisfaction and maximize reference price value. 
D)  provide an incentive to purchase a less desirable product to obtain a more desirable product. 
E)  match competitors' prices and communicate high quality.

Question 18

David manages a Shoney's restaurant. He is considering staying open later in the evening. For David, the variable costs associated with staying open longer hours will include all of the following EXCEPT

Accepted Answer

A)  ingredients used in preparing food. 
B)  hours worked by cooks. 
C)  rent on the restaurant building. 
D)  energy costs. 
E)  hours worked by the waiters and waitresses. 
A)  ingredients used in preparing food. 
B)  hours worked by cooks. 
C)  rent on the restaurant building. 
D)  energy costs. 
E)  hours worked by the waiters and waitresses.

Question 19

Yurgen is opening a financial consulting service for high-income retirees in his area. This target market is used to paying for quality and associates high quality with high prices. Yurgen should probably NOT use a market penetration pricing strategy because

Accepted Answer

A)  he might be missing out on customers who would pay more for his products. 
B)  there are moderate barriers to competitive entry in the market. 
C)  a low price might signal low quality. 
D)  he would have to determine zone pricing discounts. 
E)  the experience curve effect would drop unit costs too rapidly. 
A)  he might be missing out on customers who would pay more for his products. 
B)  there are moderate barriers to competitive entry in the market. 
C)  a low price might signal low quality. 
D)  he would have to determine zone pricing discounts. 
E)  the experience curve effect would drop unit costs too rapidly.

Question 20

Explain how the demand curve works and how it benefits a firm.

Accepted Answer

A demand curve shows how many units of a

In general, prices should not be based on costs because

The point at which the number of units sold generates enough revenue to equal the total costs of running an operation is known as the

Ryan gave the manager of his convenience store a set of binoculars so she could see the gasoline prices charged by the other convenience store at that intersection. Ryan told the manager to always match the gasoline prices of the other store. Ryan is using a _____________________ pricing strategy.

Why is it more fun and challenging for a marketer to be part of a market characterized by monopolistic competition than be part of one characterized by pure competition?

Traditional demand curve economic theory is used by marketers to understand _______________ in the five Cs of pricing.

The Robinson-Patman Act does NOT apply to end consumers, at which point many forms of price discrimination occur.

Margaret has been invited to a fancy dinner party and wants to bring a good bottle of wine as a gift for the host. Since she does not know much about wine, she will likely use the price of the wines as

Cross-price elasticity is the

A _________________ strategy involves accurately measuring all the factors needed to predict sales and profits at various price levels, so that the price level that produces the highest return can be chosen.

Why are price wars more common in oligopolies than in pure competition markets?

price fixing occurs when competitors collude to control prices, and price fixing occurs within a marketing channel to control prices passed on to consumers.

The demand curve for prestige products generally slopes downward due to higher prices.

The observation that consumers are generally more sensitive to price increases than to price decreases suggests that

If a firm is engaged in monopolistic competition, it should seek a way to differentiate itself.

Naomi tells her sales representatives the goal is to generate at least a 20 percent return on investment for all of the industrial building supplies they sell. Naomi is using a _______________ pricing strategy.

The major objectives associated with a market penetration pricing strategy are to

David manages a Shoney's restaurant. He is considering staying open later in the evening. For David, the variable costs associated with staying open longer hours will include all of the following EXCEPT

Yurgen is opening a financial consulting service for high-income retirees in his area. This target market is used to paying for quality and associates high quality with high prices. Yurgen should probably NOT use a market penetration pricing strategy because

Explain how the demand curve works and how it benefits a firm.

Overview of Marketing

Developing Marketing Strategies and a Marketing Plan

Social and Mobile Marketing

Marketing Ethics

Analyzing the Marketing Environment

Consumer Behavior

Business-To-Business Marketing

Global Marketing

Segmentation, Targeting, and Positioning

Marketing Research

Product, Branding, and Packaging Decisions

Developing New Products

Services: the Intangible Product

Supply Chain and Channel Management

Retailing and Multichannel Marketing

Integrated Marketing Communications

Advertising, Public Relations, and Sales Promotions

Personal Selling and Sales Management

Filters

Exam 14: Pricing Concepts for Establishing Value

In general, prices should not be based on costs because

The point at which the number of units sold generates enough revenue to equal the total costs of running an operation is known as the

Ryan gave the manager of his convenience store a set of binoculars so she could see the gasoline prices charged by the other convenience store at that intersection. Ryan told the manager to always match the gasoline prices of the other store. Ryan is using a _____________________ pricing strategy.

Why is it more fun and challenging for a marketer to be part of a market characterized by monopolistic competition than be part of one characterized by pure competition?

Traditional demand curve economic theory is used by marketers to understand _______________ in the five Cs of pricing.

The Robinson-Patman Act does NOT apply to end consumers, at which point many forms of price discrimination occur.

Margaret has been invited to a fancy dinner party and wants to bring a good bottle of wine as a gift for the host. Since she does not know much about wine, she will likely use the price of the wines as

Cross-price elasticity is the

A _________________ strategy involves accurately measuring all the factors needed to predict sales and profits at various price levels, so that the price level that produces the highest return can be chosen.

Why are price wars more common in oligopolies than in pure competition markets?

__________ price fixing occurs when competitors collude to control prices, and __________ price fixing occurs within a marketing channel to control prices passed on to consumers.

The demand curve for prestige products generally slopes downward due to higher prices.

The observation that consumers are generally more sensitive to price increases than to price decreases suggests that

If a firm is engaged in monopolistic competition, it should seek a way to differentiate itself.

Naomi tells her sales representatives the goal is to generate at least a 20 percent return on investment for all of the industrial building supplies they sell. Naomi is using a _______________ pricing strategy.

The major objectives associated with a market penetration pricing strategy are to

David manages a Shoney's restaurant. He is considering staying open later in the evening. For David, the variable costs associated with staying open longer hours will include all of the following EXCEPT

Yurgen is opening a financial consulting service for high-income retirees in his area. This target market is used to paying for quality and associates high quality with high prices. Yurgen should probably NOT use a market penetration pricing strategy because

Explain how the demand curve works and how it benefits a firm.

Overview of Marketing

Developing Marketing Strategies and a Marketing Plan

Social and Mobile Marketing

Marketing Ethics

Analyzing the Marketing Environment

Consumer Behavior

Business-To-Business Marketing

Global Marketing

Segmentation, Targeting, and Positioning

Marketing Research

Product, Branding, and Packaging Decisions

Developing New Products

Services: the Intangible Product

Supply Chain and Channel Management

Retailing and Multichannel Marketing

Integrated Marketing Communications

Advertising, Public Relations, and Sales Promotions

Personal Selling and Sales Management

Filters

price fixing occurs when competitors collude to control prices, and price fixing occurs within a marketing channel to control prices passed on to consumers.