Exam 13: Building the Price Foundation

Acme Shoe Co. sells heel replacement kits for men's shoes. It has fixed costs of $6 million and unit variable costs of $5 per kit. Acme would like to earn a profit of $2 million. How many kits must Acme sell at a price of $15?

The practice of simultaneously increasing product and service benefits while maintaining or decreasing price is referred to as

The formula Total revenue - Total cost or [(Unit price × Quantity sold) - (Fixed cost + Variable cost)] represents

The competitive market situation in which many sellers follow the market price for identical, commodity products is referred to as

Estimating cost, conducting a marginal analysis, and performing a break-even analysis are issues that would be addressed during __________ of the price-setting process.

You have been asked to calculate the break-even point for a new line of T-shirts. The selling price will be $25 per shirt. The labor cost is $5 per shirt. The administrative costs of operating the company are estimated to be $60,000 annually, and the sales and marketing expenses are $20,000 a year. Additionally, the cost of materials will be $10 per shirt. What is the break-even quantity?

Demand curve refers to a graph that relates

All of the following statements are true about an oligopolistic competitive market situation except

Washburn Guitars markets its guitars to four distinct market segments. The firm's mass-produced instruments are targeted at

Which of the following statements about price elasticity of demand is most accurate?

A demand curve graph typically appears as

If the price for Red Baron frozen cheese pizzas moves from $8 to $6 per unit along a demand curve D₁, most likely the quantity demanded

Which of the following statements regarding pricing objectives is most accurate?

The percentage change in quantity demanded relative to the percentage change in price is referred to as

Attorneys' fees, entrance fees, train fares, and organization dues are all examples of

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

Demand for a product is likely to be more price elastic if it

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). If your picture frame store sold 2,000 picture frames, what would your profit (or loss) be?

Economists have identified four types of competitive markets: oligopoly, monopolistic competition, pure competition, and

A maximizing current profit objective implies that a company chooses to