Exam 13: Building the Price Foundation

Suppose you are the owner of a picture frame store and you wish to calculate how many frames you must sell to cover your fixed and variable costs at a given price. Let's assume that the demand for your frames is strong, so the average price customers are willing to pay for each picture frame is $120. Also, suppose your fixed costs (FC) total $32,000 (real estate taxes, interest on a bank loan, etc.) and unit variable cost (UVC) for a picture frame is $40 (labor, glass, frame, and matting). What is the quantity of picture frames you will need to sell to break even?

Creative marketers engage in value-pricing, which is the practice of simultaneously __________ while maintaining or decreasing price.

Calculate a firm's total revenue (TR) using the following information: the unit price (P) for a product is $40; the quantity sold (Q) is 2,000; the fixed cost (FC) is $50,000; and the variable cost (VC) is $20,000.

Which of the following would be an example of an objective in Step 1 of the price-setting process?

Price elasticity of demand is determined by a number of factors such as the availability of substitutes, the cash outlay of the purchase relative to a person's disposable income, and

Fixed cost refers to

The executive vice president of Washburn Guitars has set a sales target of 2,000 units for a new line of guitars. This type of objective is a __________ pricing objective.

The sum of the expenses of a firm that is stable and does not change with the quantity of the product that is produced and sold is referred to as

The unit variable cost (UVC) equals variable cost (VC) divided by

Companies often pursue a market share objective when

Microsoft, Sony, and Nintendo are the three principal firms in the video game console market. How much price competition is most likely for video game makers?

List the following competitive markets from most competitive to least competitive.

The break-even point (BEP) = [__________ ÷ (Unit price - Unit variable cost)].

All of the following are legal and/or ethical considerations when setting a final price except

Which of the following statements would most likely be spoken during Step 3 in the price-setting process?

The ratio of the firm's sales revenues or unit sales to those of the industry (competitors plus the firm itself) is referred to as

There are more than 100 companies that manufacture natural and artificial flavorings used to enhance the taste of food before it is sold to consumers. Many of these manufacturers are regional operations. Many differentiate themselves from the competition in their advertising by specializing in one or two types of foods for which they provide flavorings. Some use their distribution strategies as a means of differentiating themselves from their competition. This industry is most likely an example of

Demand factors refers to

Explain the price equation in the context of a new car purchase.

Estimating demand, sales revenue, and price elasticity are issues that would be addressed during __________ of the price-setting process.