Exam 37: Pricing Concepts

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

_____ is a company's product sales as a percentage of total sales for that industry.

Yield management systems can only be used by service industries.

Tesla Motors "Going green" doesn't have to be boring. The Tesla Roadster Sport is an electric car that goes from 0 to 60 in four seconds and drives more like a race car than an environmentally friendly ride. But that level of performance will set you back $128,500. As of 2009, Silicon Valley-based Tesla Motors, Inc. was the only company offering highway-compatible electric cars. Most Roadster Sport buyers are car enthusiasts and are buying them for the "fun toy" aspect of having an electric car rather than for environmental reasons. -Refer to Tesla Motors.If total fixed costs are $23,400,000 and the average variable cost is $50,500,how many Roadsters must Tesla sell to break even?

Which of the following would imply elastic demand?

When Jerry took delivery of his brand new (and very expensive)Jaguar automobile,he was filled with pleasure and excitement.This is an example of the _____ effect associated with the price-quality relationship.

When price decreases and total revenue falls,demand is:

Specialty Cakes Imagine that you're planning an after-symphony fund-raising party, and you need a life-size grand piano cake. Or, you are a developer proposing a new shopping center to a group of investors, and you want to serve a cake shaped like an architectural rendition of the center. Is this impossible? No, you just need to contact Cecilia Villaveces Cakes. She actually built a life-size grand piano for a gala in Macon, Georgia. You can expect to pay anywhere from $75 to $10,000 for one of Cecilia's artistic creations, depending on complexity of design and size. She uses only the best ingredients, and no two cakes are ever quite alike. -Refer to Specialty Cakes.To set the price of her cakes,Cecilia simply doubles her costs,which often include several hours of labor and expensive raw materials.This method of price setting is called:

The dimensions of quality that are important to consumers include:

Maximization of cash should be a long-term objective.

Variable costs vary with changes in the level of output,whereas marginal costs do not vary as output changes.

Most demand curves slope:

Smelly Fruit At first glance, there is little to like about the durian. The durian is a fruit popular in Thailand that is spiky outside and stinky on the inside. When confronted with the durian for the first time, the Wall Street Journal recently reported that westerners often describe its distinctive sulphurous smell with words like stinky socks and manure. However, the durian is so popular in Thailand that one variety of the durian fruit, called the Kan Yao, has been selling for as high as $200. Even at that price, supply of the Kan Yao cannot keep up with demand. There are approximately 30 varieties of the durian grown in Thailand, with the most plentiful selling in the $15 range. The yellow flesh of the durian, the part you eat, has very powerful smell but possesses a sweet, nutty taste that Thais cannot seem to get enough of at any price. -Refer to Smelly Fruit.At $200 per Kan Yao,demand for the fruit appears to be higher than supply.Suppose that at a price of $225,the amount demanded exactly meets the amount farmers are willing and able to supply.In this case,the $225 price would be considered the _____ price.

Explain yield management systems (YMS)and discuss the types of industry where they are most appropriate.

At the end of the summer,the Bloomin' Garden Center reduced the price on all of its plants,fertilizer,and potting soil by 50 percent in order to liquidate this inventory.What type of pricing strategy is being used in this example?

Profit is the price charged to customers multiplied by the number of units sold.

Laurie knows little about cooking and does not want to spend the time to learn how to make a quiche.However,she has been asked to bring a quiche to an office retirement party.Not wanting to make a poor choice,she is likely to:

Keystoning is:

As long as the revenue of the last unit produced and sold is greater than the cost of the last unit produced and sold,a firm should:

American Girl Doll The American Girl catalog began as a concept to introduce today's girls to those 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 $90.00. Six more hardback books of Kristen's life are available for $74.95. Kristen's nightgown costs $20.00, and a matching one for the doll owner is an additional $38.00. Buy both together and the price is only $50.00. A hand-painted wooden bed and trunk for Kristen are available for $213.00. Shipping costs vary with the price of the merchandise ordered. -Refer to 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):