Exam 19: Pricing Concepts

American Girl Doll The American Girl catalog began as a concept to introduce today's girls to girls who lived in the past. Each historically accurate doll is carefully crafted and dressed and has books to describe her life. For example, Kristen is an 1854 pioneer girl who is growing up in Minnesota. Her story begins with her long sea voyage from Sweden. The basic doll dressed in a calico dress and striped apron plus the hardcover story of how she got to Minnesota costs $90. Six more hardback books of Kristen's life are available for $74.95. Kristen's nightgown costs $20, and a matching one for the doll owner is an additional $38. Buy both together and the price is only $50. A hand-painted wooden bed and trunk for Kristen are available for $213. Shipping costs vary with the price of the merchandise ordered. -Refer to the American Girl Doll.In terms of the costs of producing the doll and its accessories,the salary of the graphic designer who does the layout for the American Girl catalog is a(n):

The daily demand for bottled water is 35 bottles when the price is set at $1.However,if the price is raised to $5,the demand is only 5 bottles.The bottled water producer is willing to supply 40 bottles if the price is set at $5 per bottle,but will only supply 10 bottles if the price is set at $2.Draw the supply and demand curves for the water bottles on the graph below.Label each curve and each axis.At what level does equilibrium occur? What are the areas of surplus and shortage?

Many consumers,especially when faced with an uncertain purchase decision,think that a high price:

Firms that price their products solely on the basis of costs are adhering to the marketing concept.

What happens when demand is elastic?

_____ cost is the change in total costs associated with a one-unit change in output.

List the three categories of pricing objectives and then two specific strategies in each category that a marketer could implement to achieve those objectives.

Yield management systems can only be used by service industries.

A marketer using a profit maximization strategy will charge the highest prices the market will bear.

Personal Touch produces and markets beaded purses.When graphed,the demand schedule for its purses is a straight line.If one purse costs $20,5,000 beaded purses are sold.At $25,4,500 purses are sold.How many beaded purses will be sold if the price per purse is increased to $30?

Which of the following statements describes an advantage of status quo pricing?

Your Memory Lane produce custom-made art prints that include graphics and icons to celebrate life's special moments.For example,on his wedding anniversary David had an art print produced that celebrated highlights of his ten years with his wife,Kathy.Suppose Your Memory Lane sells the custom artwork for $500.It estimates its average variable costs to be $200 per unit produced.It figures its fixed costs to be $900,000 per year.How many prints does it have to sell to break even?

Money that is left over after paying for company activities is called:

In the mature and highly competitive furniture industry,you would expect furniture manufacturers to engage in:

What is marginal revenue? Based on the provided schedule from the Chesapeake Bay Swing Company,at which quantity should Chesapeake Bay stop producing additional swings?

The owner of specialty kitchen retail store wants to determine what price she should put on a set of mixing bowls.They cost her $7.She desires a markup of 30 percent based on selling price.Which of the following is closest to the price she should charge her customers?

Central Bark is a dog resort where pets are pampered.Which of the following is the BEST example of one of its fixed costs?

The quantity of a product that will be sold at various prices for a specified period is called:

Calculate answers for the following scenarios if retailer markups are based on their selling price:

Sherrie is seven years old and wants to open a lemonade stand in her neighborhood.She is having a tough time deciding whether to base her pricing objectives on market share,dollar sales,or unit sales.Regardless of which she chooses,her pricing objective can be categorized as: