Question 1

In an oligopolistic market,high start-up costs form significant barriers to entry for new competitors.

Accepted Answer

A) True 
 B)False

Question 2

Lower off-season prices and higher peak-season prices for lodging at resorts illustrate the use of yield management as a strategy to generate revenues for a largely fixed-cost industry.

Accepted Answer

A) True 
 B)False

Question 3

A firm minimizes its profits when marginal costs equal marginal revenues.

Accepted Answer

A) True 
 B)False

Question 4

Stefan has worked in the restaurant industry for over 20 years and recently signed a lease and plans to open his own restaurant in the next several months.He's working with his chef and bar manager to determine menu items and pricing.Of course,his pricing must be competitive as well as enable the business to cover costs and earn a profit.He decides that he will utilize a 60% mark-up on costs and informs the chef and bar manager to utilize this basis when determining prices for menu items.What method of pricing is Stefan utilizing?​

Accepted Answer

A) ​cost-plus pricing 
B) ​full-cost pricing 
C) ​incremental-cost pricing 
D) ​value-add pricing 
A) ​cost-plus pricing 
B) ​full-cost pricing 
C) ​incremental-cost pricing 
D) ​value-add pricing

Question 5

You are asked by a non-marketing executive of your hip-hop music company to clarify some financial language she heard at a recent annual presentation to investors.She asks you to give her a simple one-sentence definition of "breakeven analysis." ​
​Required:
Which of the following definitions meets her request for a simple one-sentence definition of "breakeven analysis"?"

Accepted Answer

A) ​"We have been cutting records for years, so our customers are used to paying a certain amount for our albums. We keep our price constant to get repeat business." 
B) ​"We first do our research to find out what price our competitors are selling their records for. Then we use that number to figure out how many records we need to cut to make a larger profit than our competitors." 
C) ​"We first figure out the number of records we need to sell at a set price minus records returned for refunds. That amount of money must be enough to cover the total costs of our producing the records." 
D) ​"We use all our information from the previous year's sales, then we add 10 percent to the production and 10 percent to the price." 
E) ​"We want to make sure that we sell all the albums that we produce, so we start out at a full price, and make discount adjustments along the way." 
A) ​"We have been cutting records for years, so our customers are used to paying a certain amount for our albums. We keep our price constant to get repeat business." 
B) ​"We first do our research to find out what price our competitors are selling their records for. Then we use that number to figure out how many records we need to cut to make a larger profit than our competitors." 
C) ​"We first figure out the number of records we need to sell at a set price minus records returned for refunds. That amount of money must be enough to cover the total costs of our producing the records." 
D) ​"We use all our information from the previous year's sales, then we add 10 percent to the production and 10 percent to the price." 
E) ​"We want to make sure that we sell all the albums that we produce, so we start out at a full price, and make discount adjustments along the way."

Question 6

In the context of pricing objectives,which of the following is the purpose of adopting a profitability objective?

Accepted Answer

A) Market share 
B) Image 
C) Sales maximization 
D) Target return 
A) Market share 
B) Image 
C) Sales maximization 
D) Target return

Question 7

Defense based on cost differentials against charges of price discrimination under the Robinson-Patman Act works only if the price differences exceed the cost differences resulting from selling to various classes of buyers.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following is a market structure in which relatively few sellers compete and where high start-up costs form barriers to keep out new competitors?

Accepted Answer

A) Pure competition 
B) Discriminatory competition 
C) Oligopoly 
D) Monopoly 
A) Pure competition 
B) Discriminatory competition 
C) Oligopoly 
D) Monopoly

Question 9

Match each item with the correct statement below.
-_____ are volume-related pricing objectives that have the goal of controlling a portion of the market for a firm's product.

Accepted Answer

A) breakeven analysis 
B) tariffs 
C) unfair-trade laws 
D) incremental-cost pricing 
E) profit maximization
F)demand
G)value pricing
H)monopoly
I)elasticity
J)marginal
K)fair-trade laws
L)yield management
M)oligopoly
N)cost-plus pricing
O)full-cost pricing
P)supply
Q)marginal analysis
R)target-return objectives
S)market-share objectives
T)pure competition 
A) breakeven analysis 
B) tariffs 
C) unfair-trade laws 
D) incremental-cost pricing 
E) profit maximization
F)demand
G)value pricing
H)monopoly
I)elasticity
J)marginal
K)fair-trade laws
L)yield management
M)oligopoly
N)cost-plus pricing
O)full-cost pricing
P)supply
Q)marginal analysis
R)target-return objectives
S)market-share objectives
T)pure competition

Question 10

A local eye doctor is seeking to expand its practice and entice new customers to visit for their annual eye exam and purchase glasses or contacts if prescribed.The office is offering 2 pairs of glasses for $69 with the goal of attracting a large number of new patients.What type of pricing objective is utilized by the office?​

Accepted Answer

A) ​volume 
B) ​profitability 
C) ​prestige 
D) ​meeting competition 
A) ​volume 
B) ​profitability 
C) ​prestige 
D) ​meeting competition

Question 11

Firms that use a volume objective to guide their pricing strategy believe that increased sales are less important in the long-run competitive picture than immediate high profits.

Accepted Answer

A) True 
 B)False

Question 12

​Jim is the sales manager for a pharmaceutical firm.His boss has decided that Jim's team will need to earn their annual bonuses by achieving a 10 percent return on the company's investment in a blockbuster cold remedy.During a department meeting,Jim explains this target return in terms of the firm's overall pricing objectives.What is he most likely to say?

Accepted Answer

A) ​Target return is a way to ensure cost recovery. 
B) ​Target return enables the firm to achieve competition objectives. 
C) ​Target return enables the firm to achieve profitability objectives. 
D) ​Target return is effective as an evaluation tool but is not intended to achieve pricing objectives. 
E) ​Target return is a mathematical relationship, not a pricing tool. 
A) ​Target return is a way to ensure cost recovery. 
B) ​Target return enables the firm to achieve competition objectives. 
C) ​Target return enables the firm to achieve profitability objectives. 
D) ​Target return is effective as an evaluation tool but is not intended to achieve pricing objectives. 
E) ​Target return is a mathematical relationship, not a pricing tool.

Question 13

Which of the following statements is TRUE regarding issues in pricing?​

Accepted Answer

A) ​it can be difficult to estimate demand curves 
B) ​marketing research can provide accurate estimates of demand curves 
C) ​most organizations price in such a way to maximize profitability 
D) ​pricing managers have difficulty obtaining accurate cost information 
A) ​it can be difficult to estimate demand curves 
B) ​marketing research can provide accurate estimates of demand curves 
C) ​most organizations price in such a way to maximize profitability 
D) ​pricing managers have difficulty obtaining accurate cost information

Question 14

Statutes enacted in most states that once permitted manufacturers to stipulate a minimum retail price for their product are called _____.

Accepted Answer

A) fair-trade laws 
B) tax-exemption laws 
C) price discrimination laws 
D) loss-leader laws 
A) fair-trade laws 
B) tax-exemption laws 
C) price discrimination laws 
D) loss-leader laws

Question 15

After years of using full-cost pricing in a niche market for luxury watches,you find your competition has slowly increased its market share each year with discounted prices.Focus groups have confirmed that the image of your watches is still one of success and prestige,but more people are willing to consider substitutes.Incremental cost-pricing could enable you to increase profits and unsettle your competitor's complacency.You know that changing to incremental-cost pricing does have a significant downside problem.But you are also aware that you can prevent that from happening. ​
​What is the downside problem and which solution can you take to prevent its happening?

Accepted Answer

A) ​downside is running out of product. solution is to ramp up your production capacity to meet the demand of customers wanting lower prices 
B) ​downside is lack of audience awareness. solution is to create high-energy ads to appeal to young customers 
C) ​downside is the tax consequences. solution is to tell the CEO that a change in your pricing strategy could lead to an IRS audit 
D) ​downside is that the whole market could change. solution is to accept the fact that the wholesale and retail prices of used watches could drop markedly 
E) ​downside is losing your niche market. solution is to take solid measures to isolate your markets for lower-priced watches from your higher-priced models 
A) ​downside is running out of product. solution is to ramp up your production capacity to meet the demand of customers wanting lower prices 
B) ​downside is lack of audience awareness. solution is to create high-energy ads to appeal to young customers 
C) ​downside is the tax consequences. solution is to tell the CEO that a change in your pricing strategy could lead to an IRS audit 
D) ​downside is that the whole market could change. solution is to accept the fact that the wholesale and retail prices of used watches could drop markedly 
E) ​downside is losing your niche market. solution is to take solid measures to isolate your markets for lower-priced watches from your higher-priced models

Question 16

Pricing objectives tied directly to meeting prices charged by major competitors emphasize the price element of the marketing mix and focus less strongly on nonprice variables.

Accepted Answer

A) True 
 B)False

Question 17

Demand often shows:

Accepted Answer

A) more elasticity in the short run than in the long run. 
B) less elasticity in the long run than in the short run. 
C) the same elasticity in the short run and in the long run. 
D) less elasticity in the short run than in the long run. 
A) more elasticity in the short run than in the long run. 
B) less elasticity in the long run than in the short run. 
C) the same elasticity in the short run and in the long run. 
D) less elasticity in the short run than in the long run.

Question 18

_____ maximization is identified as the point at which the additional revenue gained by increasing the price of a product equals the increase in total costs.

Accepted Answer

A) Profit 
B) Volume 
C) Sales 
D) Market share 
A) Profit 
B) Volume 
C) Sales 
D) Market share

Question 19

A local apparel shop sets prices by adding a 45 percent markup to the invoice price charged by the supplier.This method of pricing is known as _____ pricing.

Accepted Answer

A) cost-plus 
B) breakeven 
C) full-cost 
D) incremental-cost 
A) cost-plus 
B) breakeven 
C) full-cost 
D) incremental-cost

Question 20

A schedule of the amounts of a firm's product that consumers will purchase at different prices during a specified time period is referred to as _____.

Accepted Answer

A) demand 
B) supply 
C) surplus 
D) ration 
A) demand 
B) supply 
C) surplus 
D) ration

In an oligopolistic market,high start-up costs form significant barriers to entry for new competitors.

Lower off-season prices and higher peak-season prices for lodging at resorts illustrate the use of yield management as a strategy to generate revenues for a largely fixed-cost industry.

A firm minimizes its profits when marginal costs equal marginal revenues.

In the context of pricing objectives,which of the following is the purpose of adopting a profitability objective?

Defense based on cost differentials against charges of price discrimination under the Robinson-Patman Act works only if the price differences exceed the cost differences resulting from selling to various classes of buyers.

Which of the following is a market structure in which relatively few sellers compete and where high start-up costs form barriers to keep out new competitors?

Match each item with the correct statement below. -_____ are volume-related pricing objectives that have the goal of controlling a portion of the market for a firm's product.

Firms that use a volume objective to guide their pricing strategy believe that increased sales are less important in the long-run competitive picture than immediate high profits.

Which of the following statements is TRUE regarding issues in pricing?

Statutes enacted in most states that once permitted manufacturers to stipulate a minimum retail price for their product are called _____.

Pricing objectives tied directly to meeting prices charged by major competitors emphasize the price element of the marketing mix and focus less strongly on nonprice variables.

Demand often shows:

_____ maximization is identified as the point at which the additional revenue gained by increasing the price of a product equals the increase in total costs.

A local apparel shop sets prices by adding a 45 percent markup to the invoice price charged by the supplier.This method of pricing is known as _____ pricing.

A schedule of the amounts of a firm's product that consumers will purchase at different prices during a specified time period is referred to as _____.

Marketing: the Art and Science of Satisfying Customers

Strategic Planning in Contemporary Marketing

The Marketing Environment, ethics, and Social Responsibility

Social Media: Living in the Connected World

E-Business: Managing the Customer Experience

Consumer Behavior

Business-To-Business B2bmarketing

Global Marketing

Market Segmentation, targeting, and Positioning

Marketing Research in the Era of Big Data

Relationship Marketing and Customer Relationship Management Crm

Product and Service Strategies

Developing and Managing Brand and Product Categories

Marketing Channels and Supply Chain Management

Retailers, wholesalers, and Direct Marketers

Integrated Marketing Communications, advertising, and Public Relations

Personal Selling and Sales Promotion

Pricing Strategies

Developing an Effective Marketing Plan

Financial Analysis in Marketing

Filters

Exam 18: Pricing Concepts

In an oligopolistic market,high start-up costs form significant barriers to entry for new competitors.

Lower off-season prices and higher peak-season prices for lodging at resorts illustrate the use of yield management as a strategy to generate revenues for a largely fixed-cost industry.

A firm minimizes its profits when marginal costs equal marginal revenues.

In the context of pricing objectives,which of the following is the purpose of adopting a profitability objective?

Defense based on cost differentials against charges of price discrimination under the Robinson-Patman Act works only if the price differences exceed the cost differences resulting from selling to various classes of buyers.

Which of the following is a market structure in which relatively few sellers compete and where high start-up costs form barriers to keep out new competitors?

Match each item with the correct statement below. -_____ are volume-related pricing objectives that have the goal of controlling a portion of the market for a firm's product.

Firms that use a volume objective to guide their pricing strategy believe that increased sales are less important in the long-run competitive picture than immediate high profits.

Which of the following statements is TRUE regarding issues in pricing?​

Statutes enacted in most states that once permitted manufacturers to stipulate a minimum retail price for their product are called _____.

Pricing objectives tied directly to meeting prices charged by major competitors emphasize the price element of the marketing mix and focus less strongly on nonprice variables.

Demand often shows:

_____ maximization is identified as the point at which the additional revenue gained by increasing the price of a product equals the increase in total costs.

A local apparel shop sets prices by adding a 45 percent markup to the invoice price charged by the supplier.This method of pricing is known as _____ pricing.

A schedule of the amounts of a firm's product that consumers will purchase at different prices during a specified time period is referred to as _____.

Marketing: the Art and Science of Satisfying Customers

Strategic Planning in Contemporary Marketing

The Marketing Environment, ethics, and Social Responsibility

Social Media: Living in the Connected World

E-Business: Managing the Customer Experience

Consumer Behavior

Business-To-Business B2bmarketing

Global Marketing

Market Segmentation, targeting, and Positioning

Marketing Research in the Era of Big Data

Relationship Marketing and Customer Relationship Management Crm

Product and Service Strategies

Developing and Managing Brand and Product Categories

Marketing Channels and Supply Chain Management

Retailers, wholesalers, and Direct Marketers

Integrated Marketing Communications, advertising, and Public Relations

Personal Selling and Sales Promotion

Pricing Strategies

Developing an Effective Marketing Plan

Financial Analysis in Marketing

Filters

Which of the following statements is TRUE regarding issues in pricing?