Exam 37: Pricing Concepts

As products enter the growth stage of the product life cycle,prices generally begin to stabilize.

Last quarter,Abingdon Company sold 1,000 decorative decals for $1 each; Cedar Decaliania sold 200 decorative decals at $4 each; Creative Decals sold 500 decals at $2 each; and Donnelly,Inc.sold 300 decals for $4 each.Assuming that the four companies are the only firms competing in the decorative decal market,calculate unit and dollar market share for each company for last quarter.For each company,which market share figure might be used in an advertisement for that company?

Market share is a company's product sales as a percentage of its total sales for that industry.

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.Which of the following is the BEST example of a fixed cost for Cecilia Villaveces Cakes?

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

An office supply store can buy a desk for $300.If the store owner sells the desk for $450,what is the markup based on cost?

If price _____ and revenue _____,demand is elastic.

As a short-term pricing objective,_____ can be effectively used on a temporary basis to sell off excessive inventory.

Which of the following statements about the Internet is true?

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 five 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?

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.If it cost a Thai farmer $100 to produce and $25 to market the Kan Yao durian that she sells for $200 at the marketplace,her revenue,for each durian sold,would be:

Which of the following is not a real trend that has affected the consumer market?

Demand for which of the following products or services is most likely inelastic?

When consumers are sensitive to price changes,_____ occurs.

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

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.The price of the Roadster was set so that the marginal revenue equals marginal cost.This represents a _____ approach.

Target return on investment is the most common profit objective used by firms.

When Apple,Inc.developed and introduced the iPad,it was unique as it essentially combined a touch-based portable computer,a wireless marketplace,and an eBook reader.As such,in the short run,it seemed that demand for the product would be inelastic,with no real existing competition.The recommend pricing strategy in such a situation would be:

Peggy's Twist Shack sells soft-serve ice cream.Peggy graphed the demand per week for vanilla ice cream cones.The graph indicates a demand schedule that slopes downward and to the right.This graph indicates that the quantity of vanilla ice cream cones demanded increases as:

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