Question 1

Given the following data, compute the BEP in units: Selling price = $2.00
Variable cost = $0.75
Fixed cost = $250,000

Accepted Answer

A)  333,334 
B)  200,000 
C)  125,000 
D)  400,000 
E)  Cannot be determined with this information. 
A)  333,334 
B)  200,000 
C)  125,000 
D)  400,000 
E)  Cannot be determined with this information.

Question 2

Setting a few price levels for a product line and then marking all items at these price levels is:

Accepted Answer

A)  leader pricing. 
B)  price lining. 
C)  product-bundle pricing. 
D)  penetration pricing. 
E)  odd-even pricing. 
A)  leader pricing. 
B)  price lining. 
C)  product-bundle pricing. 
D)  penetration pricing. 
E)  odd-even pricing.

Question 3

Average-cost pricing guarantees that the firm will earn enough to at least cover its costs.

Accepted Answer

A) True 
 B)False

Question 4

_________ refers to the change in total revenue that results from the sale of one more unit of a product.

Accepted Answer

A)  Total revenue 
B)  Marginal revenue 
C)  Average revenue 
D)  Diminishing revenue 
E)  Economies of scale 
A)  Total revenue 
B)  Marginal revenue 
C)  Average revenue 
D)  Diminishing revenue 
E)  Economies of scale

Question 5

Average-cost pricing means adding a reasonable markup to the total cost of a product.

Accepted Answer

A) True 
 B)False

Question 6

Firms with high markups and low turnover rates may earn lower profits than firms with low markups and high turnover rates.

Accepted Answer

A) True 
 B)False

Question 7

A firm in monopolistic competition has "marginal revenue" which:

Accepted Answer

A)  is always greater than its marginal cost. 
B)  is always shown above its related down-sloping demand curve when plotted on a graph. 
C)  is the change in total revenue which results from the sale of one more unit of a product. 
D)  is always positive (i.e., greater than zero). 
E)  All of these. 
A)  is always greater than its marginal cost. 
B)  is always shown above its related down-sloping demand curve when plotted on a graph. 
C)  is the change in total revenue which results from the sale of one more unit of a product. 
D)  is always positive (i.e., greater than zero). 
E)  All of these.

Question 8

Demand-backward pricing is commonly used by producers of consumer products, especially shopping products such as women's clothing and appliances.

Accepted Answer

A) True 
 B)False

Question 9

_____ are costs that a customer faces by buying a product that is different from what has been purchased or used in the past.

Accepted Answer

A)  Marginal costs 
B)  First-mover costs 
C)  Switching costs 
D)  Pioneering costs 
E)  Opportunity costs 
A)  Marginal costs 
B)  First-mover costs 
C)  Switching costs 
D)  Pioneering costs 
E)  Opportunity costs

Question 10

If Macy's department store prices its men's ties at $10 intervals between $38 and $68, this is an example of:

Accepted Answer

A)  Reference pricing 
B)  Price lining 
C)  Bundle pricing 
D)  Leader pricing 
E)  Bait pricing 
A)  Reference pricing 
B)  Price lining 
C)  Bundle pricing 
D)  Leader pricing 
E)  Bait pricing

Question 11

A large supermarket chain purchases a box of cereal from a food wholesaler. If the supermarket chain uses a markup of 20 percent on its selling price of $2.85, what is the price the supermarket chain paid the food wholesaler?

Accepted Answer

A)  $2.12 
B)  $2.28 
C)  $2.45 
D)  $2.55 
E)  $2.67 
A)  $2.12 
B)  $2.28 
C)  $2.45 
D)  $2.55 
E)  $2.67

Question 12

Sam's Club purchases a 24-pack of bottled water from a wholesaler for $3.85 and wants a markup of 25 percent. What is the price that Sam's Club charges its customers?

Accepted Answer

A)  $4.25 
B)  $4.75 
C)  $4.95 
D)  $5.13 
E)  $5.75 
A)  $4.25 
B)  $4.75 
C)  $4.95 
D)  $5.13 
E)  $5.75

Question 13

A markup is the dollar amount added to the cost of products to get the selling price.

Accepted Answer

A) True 
 B)False

Question 14

Break-even analysis

Accepted Answer

A)  assumes that the demand curve is perfectly horizontal at the selling price. 
B)  reveals the price that will earn the highest profit. 
C)  cannot be used for comparing several different alternatives (for example, assuming different prices). 
D)  considers the effect of price on the quantity that consumers will want. 
E)  None of these alternatives is correct. 
A)  assumes that the demand curve is perfectly horizontal at the selling price. 
B)  reveals the price that will earn the highest profit. 
C)  cannot be used for comparing several different alternatives (for example, assuming different prices). 
D)  considers the effect of price on the quantity that consumers will want. 
E)  None of these alternatives is correct.

Question 15

The stockturn rate is the number of times the average inventory must turnover to make a profit in a given year.

Accepted Answer

A) True 
 B)False

Question 16

A retailer of men's suits who is advertising a popular brand of dress shirts at a reduced price to attract customers is using:

Accepted Answer

A)  price lining. 
B)  leader pricing. 
C)  odd-even pricing. 
D)  bait pricing. 
E)  prestige pricing. 
A)  price lining. 
B)  leader pricing. 
C)  odd-even pricing. 
D)  bait pricing. 
E)  prestige pricing.

Question 17

Cost-oriented approaches are the most common price setting approach.

Accepted Answer

A) True 
 B)False

Question 18

A producer sells an item to a wholesaler for $4.00, and the wholesaler uses a markup of 25 percent on its selling price and the retailer uses a markup of 30 percent on its selling price. What will be the retailer's selling price to its customers?

Accepted Answer

A)  $7.61 
B)  $7.55 
C)  $7.36 
D)  $7.24 
E)  $7.12 
A)  $7.61 
B)  $7.55 
C)  $7.36 
D)  $7.24 
E)  $7.12

Question 19

Competition needs to be considered when adding in overhead and profit for a bid price.

Accepted Answer

A) True 
 B)False

Question 20

Even if a manager's estimate of a demand curve is not exact, there is usually a profitable range around the price that would maximize profit.

Accepted Answer

A) True 
 B)False

Given the following data, compute the BEP in units: Selling price = $2.00 Variable cost = $0.75 Fixed cost = $250,000

Setting a few price levels for a product line and then marking all items at these price levels is:

Average-cost pricing guarantees that the firm will earn enough to at least cover its costs.

_________ refers to the change in total revenue that results from the sale of one more unit of a product.

Average-cost pricing means adding a reasonable markup to the total cost of a product.

Firms with high markups and low turnover rates may earn lower profits than firms with low markups and high turnover rates.

A firm in monopolistic competition has "marginal revenue" which:

Demand-backward pricing is commonly used by producers of consumer products, especially shopping products such as women's clothing and appliances.

_____ are costs that a customer faces by buying a product that is different from what has been purchased or used in the past.

If Macy's department store prices its men's ties at $10 intervals between $38 and $68, this is an example of:

A large supermarket chain purchases a box of cereal from a food wholesaler. If the supermarket chain uses a markup of 20 percent on its selling price of $2.85, what is the price the supermarket chain paid the food wholesaler?

Sam's Club purchases a 24-pack of bottled water from a wholesaler for $3.85 and wants a markup of 25 percent. What is the price that Sam's Club charges its customers?

A markup is the dollar amount added to the cost of products to get the selling price.

Break-even analysis

The stockturn rate is the number of times the average inventory must turnover to make a profit in a given year.

A retailer of men's suits who is advertising a popular brand of dress shirts at a reduced price to attract customers is using:

Cost-oriented approaches are the most common price setting approach.

A producer sells an item to a wholesaler for $4.00, and the wholesaler uses a markup of 25 percent on its selling price and the retailer uses a markup of 30 percent on its selling price. What will be the retailer's selling price to its customers?

Competition needs to be considered when adding in overhead and profit for a bid price.

Even if a manager's estimate of a demand curve is not exact, there is usually a profitable range around the price that would maximize profit.

Marketings Value to Consumers, Firms, and Society

Marketing Strategy Planning

Evaluating Opportunities in the Changing Marketing Environment

Focusing Marketing Strategy With Segmentation and Positioning

Final Consumers and Their Buying Behavior

Business and Organizational Customers and Their Buying Behavior

Improving Decisions With Marketing Information

Elements of Product Planning for Goods and Services

Product Management and New-Product Development

Place and Development of Channel Systems

Distribution Customer Service and Logistics

Retailers, Wholesalers, and Their Strategy Planning

Promotionintroduction to Integrated Marketing Communications

Personal Selling and Customer Service

Advertising, Publicity, and Sales Promotion

Pricing Objectives and Policies

Implementing and Controlling Marketing Plans: Evolution and Revolution

Managing Marketings Link With Other Functional Areas

Ethical Marketing in a Consumer-Oriented World

Filters

Exam 17: Price Setting in the Business World

Given the following data, compute the BEP in units: Selling price = $2.00 Variable cost = $0.75 Fixed cost = $250,000

Setting a few price levels for a product line and then marking all items at these price levels is:

Average-cost pricing guarantees that the firm will earn enough to at least cover its costs.

_________ refers to the change in total revenue that results from the sale of one more unit of a product.

Average-cost pricing means adding a reasonable markup to the total cost of a product.

Firms with high markups and low turnover rates may earn lower profits than firms with low markups and high turnover rates.

A firm in monopolistic competition has "marginal revenue" which:

Demand-backward pricing is commonly used by producers of consumer products, especially shopping products such as women's clothing and appliances.

_____ are costs that a customer faces by buying a product that is different from what has been purchased or used in the past.

If Macy's department store prices its men's ties at $10 intervals between $38 and $68, this is an example of:

A large supermarket chain purchases a box of cereal from a food wholesaler. If the supermarket chain uses a markup of 20 percent on its selling price of $2.85, what is the price the supermarket chain paid the food wholesaler?

Sam's Club purchases a 24-pack of bottled water from a wholesaler for $3.85 and wants a markup of 25 percent. What is the price that Sam's Club charges its customers?

A markup is the dollar amount added to the cost of products to get the selling price.

Break-even analysis

The stockturn rate is the number of times the average inventory must turnover to make a profit in a given year.

A retailer of men's suits who is advertising a popular brand of dress shirts at a reduced price to attract customers is using:

Cost-oriented approaches are the most common price setting approach.

A producer sells an item to a wholesaler for $4.00, and the wholesaler uses a markup of 25 percent on its selling price and the retailer uses a markup of 30 percent on its selling price. What will be the retailer's selling price to its customers?

Competition needs to be considered when adding in overhead and profit for a bid price.

Even if a manager's estimate of a demand curve is not exact, there is usually a profitable range around the price that would maximize profit.

Marketings Value to Consumers, Firms, and Society

Marketing Strategy Planning

Evaluating Opportunities in the Changing Marketing Environment

Focusing Marketing Strategy With Segmentation and Positioning

Final Consumers and Their Buying Behavior

Business and Organizational Customers and Their Buying Behavior

Improving Decisions With Marketing Information

Elements of Product Planning for Goods and Services

Product Management and New-Product Development

Place and Development of Channel Systems

Distribution Customer Service and Logistics

Retailers, Wholesalers, and Their Strategy Planning

Promotionintroduction to Integrated Marketing Communications

Personal Selling and Customer Service

Advertising, Publicity, and Sales Promotion

Pricing Objectives and Policies

Implementing and Controlling Marketing Plans: Evolution and Revolution

Managing Marketings Link With Other Functional Areas

Ethical Marketing in a Consumer-Oriented World

Filters