Question 1

A good marketing manager for a producer knows that the most profitable price and level of output:

Accepted Answer

A)  is where the positive difference between the total revenue and total cost curves is the greatest. 
B)  is where the firm's profit is the same as that of its competitors. 
C)  is where total revenue equals total cost. 
D)  is where total profit equals total cost. 
E)  None of these alternatives is correct. 
A)  is where the positive difference between the total revenue and total cost curves is the greatest. 
B)  is where the firm's profit is the same as that of its competitors. 
C)  is where total revenue equals total cost. 
D)  is where total profit equals total cost. 
E)  None of these alternatives is correct.

Question 2

The BEP, in units, can be found by dividing

Accepted Answer

A)  total fixed costs by the fixed cost contribution per unit. 
B)  total variable costs by the variable cost contribution per unit. 
C)  total variable costs by the fixed cost contribution per unit. 
D)  the assumed selling price per unit by the variable cost per unit. 
E)  total variable costs by total fixed costs. 
A)  total fixed costs by the fixed cost contribution per unit. 
B)  total variable costs by the variable cost contribution per unit. 
C)  total variable costs by the fixed cost contribution per unit. 
D)  the assumed selling price per unit by the variable cost per unit. 
E)  total variable costs by total fixed costs.

Question 3

Which of the following observations concerning a "reference price" is true?

Accepted Answer

A)  Reference price is the company's cost to produce the product. 
B)  Reference price is set by regulators. 
C)  Demand may increase if a firm's price is lower than a customer's reference price. 
D)  All customers have the same reference prices for the same basic type of purchase. 
A)  Reference price is the company's cost to produce the product. 
B)  Reference price is set by regulators. 
C)  Demand may increase if a firm's price is lower than a customer's reference price. 
D)  All customers have the same reference prices for the same basic type of purchase.

Question 4

Marginal analysis:

Accepted Answer

A)  can be very useful if a firm's pricing objective is profit maximization. 
B)  focuses on the last unit which will be sold. 
C)  can be used to find the most profitable price and quantity. 
D)  can help find the price that results in the greatest difference between total revenue and total cost. 
E)  All of these alternatives are correct. 
A)  can be very useful if a firm's pricing objective is profit maximization. 
B)  focuses on the last unit which will be sold. 
C)  can be used to find the most profitable price and quantity. 
D)  can help find the price that results in the greatest difference between total revenue and total cost. 
E)  All of these alternatives are correct.

Question 5

Prestige pricing involves setting a rather high price because the product has a normal down-sloping demand curve.

Accepted Answer

A) True 
 B)False

Question 6

When consumers decide to purchase a music CD from Amazon.com, the company's website often suggests that consumers purchase an additional CD by the same artist for a combined price that is lower than the two CDs would sell for separately. Amazon.com is using:

Accepted Answer

A)  Product-bundle pricing. 
B)  Complementary product pricing. 
C)  Full-line pricing. 
D)  Bid pricing. 
E)  Demand-backward pricing. 
A)  Product-bundle pricing. 
B)  Complementary product pricing. 
C)  Full-line pricing. 
D)  Bid pricing. 
E)  Demand-backward pricing.

Question 7

Some consumers maintain a "price-quality association," meaning that if a product has a high price, they assume the product must have high quality. This "price-quality association" is the basis for the use of:

Accepted Answer

A)  Odd-even pricing. 
B)  Prestige pricing. 
C)  Leader pricing. 
D)  Reference pricing. 
E)  Price lining. 
A)  Odd-even pricing. 
B)  Prestige pricing. 
C)  Leader pricing. 
D)  Reference pricing. 
E)  Price lining.

Question 8

Which of the following pricing approaches should be used by a profit-oriented retailer if its demand curve is down-sloping to the right for a while-but then actually bends back to the left at lower prices?

Accepted Answer

A)  Psychological pricing 
B)  Prestige pricing 
C)  Average-cost pricing 
D)  Bait pricing 
E)  Penetration pricing 
A)  Psychological pricing 
B)  Prestige pricing 
C)  Average-cost pricing 
D)  Bait pricing 
E)  Penetration pricing

Question 9

Setting relatively high prices to suggest high-quality or high-status is:

Accepted Answer

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

Question 10

By definition, a markup of $1 on a cost of $2 translates to a markup of 40 percent.

Accepted Answer

A) True 
 B)False

Question 11

The main advantage that marginal analysis has over most other popular pricing methods is that it:

Accepted Answer

A)  Considers both fixed and variable costs. 
B)  Takes into account the break-even point. 
C)  Allows managers to evaluate pricing alternatives. 
D)  Takes into account both costs and demand. 
E)  Incorporates the markup chain. 
A)  Considers both fixed and variable costs. 
B)  Takes into account the break-even point. 
C)  Allows managers to evaluate pricing alternatives. 
D)  Takes into account both costs and demand. 
E)  Incorporates the markup chain.

Question 12

Which of the following observations is false?

Accepted Answer

A)  Competition needs to be considered when adding in overhead and profit for a bid price. 
B)  Some sellers fake their records to make costs seem higher than they really are. 
C)  Negotiated price is a price set based on bargaining between the buyer and seller. 
D)  Negotiated pricing is rare in situations where the marketing mix is adjusted for each customer. 
E)  Negotiated pricing is a demand-oriented approach. 
A)  Competition needs to be considered when adding in overhead and profit for a bid price. 
B)  Some sellers fake their records to make costs seem higher than they really are. 
C)  Negotiated price is a price set based on bargaining between the buyer and seller. 
D)  Negotiated pricing is rare in situations where the marketing mix is adjusted for each customer. 
E)  Negotiated pricing is a demand-oriented approach.

Question 13

The break-even point is the intersection of the total cost curve and the total profit curve.

Accepted Answer

A) True 
 B)False

Question 14

Auctions have not proved very effective in determining how much potential customers will (or will not) pay for a product.

Accepted Answer

A) True 
 B)False

Question 15

Consumers are more likely to be price sensitive when _____.

Accepted Answer

A)  it is not easy to compare the prices of different goods 
B)  the marginal cost of production is zero 
C)  the price of the good is very low 
D)  they have many substitute ways of meeting a need 
E)  someone else pays the bill or shares the cost 
A)  it is not easy to compare the prices of different goods 
B)  the marginal cost of production is zero 
C)  the price of the good is very low 
D)  they have many substitute ways of meeting a need 
E)  someone else pays the bill or shares the cost

Question 16

A tire retailer is advertising a very low price on a popular size tire. When a customer comes into the store, the clerk says the low-priced item is sold out, and tries to convince the customer to buy the top-of-the-line model-claiming the low priced model is not a very good buy even at the low price. This is an example of:

Accepted Answer

A)  leader pricing. 
B)  full-line pricing. 
C)  value in use pricing. 
D)  price lining. 
E)  bait pricing. 
A)  leader pricing. 
B)  full-line pricing. 
C)  value in use pricing. 
D)  price lining. 
E)  bait pricing.

Question 17

When a firm's average variable cost is constant-no matter how much is produced-then the firm's:

Accepted Answer

A)  average cost will increase as the quantity produced increases. 
B)  fixed cost must be zero. 
C)  average cost will also be constant. 
D)  average fixed cost will also be constant. 
E)  average cost will decrease as the quantity produced increases. 
A)  average cost will increase as the quantity produced increases. 
B)  fixed cost must be zero. 
C)  average cost will also be constant. 
D)  average fixed cost will also be constant. 
E)  average cost will decrease as the quantity produced increases.

Question 18

The text says "markup" means percent of:

Accepted Answer

A)  "mark-on." 
B)  selling price-unless otherwise stated. 
C)  fixed cost. 
D)  delivered cost-unless otherwise stated. 
E)  cost of sales. 
A)  "mark-on." 
B)  selling price-unless otherwise stated. 
C)  fixed cost. 
D)  delivered cost-unless otherwise stated. 
E)  cost of sales.

Question 19

A retail store advertises an SLR digital camera for $350. Once bargain hunters come to the store, salespeople point out the disadvantages of the low-priced camera and try to convince them to trade up to a better, and more expensive, unit. This is an example of

Accepted Answer

A)  price following. 
B)  bait pricing. 
C)  odd-even pricing. 
D)  low pricing. 
E)  everyday low pricing. 
A)  price following. 
B)  bait pricing. 
C)  odd-even pricing. 
D)  low pricing. 
E)  everyday low pricing.

Question 20

At zero output, total variable cost is

Accepted Answer

A)  higher than total fixed cost. 
B)  equal to total fixed cost. 
C)  unity. 
D)  zero. 
E)  substantial. 
A)  higher than total fixed cost. 
B)  equal to total fixed cost. 
C)  unity. 
D)  zero. 
E)  substantial.

A good marketing manager for a producer knows that the most profitable price and level of output:

The BEP, in units, can be found by dividing

Which of the following observations concerning a "reference price" is true?

Marginal analysis:

Prestige pricing involves setting a rather high price because the product has a normal down-sloping demand curve.

When consumers decide to purchase a music CD from Amazon.com, the company's website often suggests that consumers purchase an additional CD by the same artist for a combined price that is lower than the two CDs would sell for separately. Amazon.com is using:

Some consumers maintain a "price-quality association," meaning that if a product has a high price, they assume the product must have high quality. This "price-quality association" is the basis for the use of:

Which of the following pricing approaches should be used by a profit-oriented retailer if its demand curve is down-sloping to the right for a while-but then actually bends back to the left at lower prices?

Setting relatively high prices to suggest high-quality or high-status is:

By definition, a markup of $1 on a cost of $2 translates to a markup of 40 percent.

The main advantage that marginal analysis has over most other popular pricing methods is that it:

Which of the following observations is false?

The break-even point is the intersection of the total cost curve and the total profit curve.

Auctions have not proved very effective in determining how much potential customers will (or will not) pay for a product.

Consumers are more likely to be price sensitive when _____.

When a firm's average variable cost is constant-no matter how much is produced-then the firm's:

The text says "markup" means percent of:

A retail store advertises an SLR digital camera for $350. Once bargain hunters come to the store, salespeople point out the disadvantages of the low-priced camera and try to convince them to trade up to a better, and more expensive, unit. This is an example of

At zero output, total variable cost is

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

A good marketing manager for a producer knows that the most profitable price and level of output:

The BEP, in units, can be found by dividing

Which of the following observations concerning a "reference price" is true?

Marginal analysis:

Prestige pricing involves setting a rather high price because the product has a normal down-sloping demand curve.

When consumers decide to purchase a music CD from Amazon.com, the company's website often suggests that consumers purchase an additional CD by the same artist for a combined price that is lower than the two CDs would sell for separately. Amazon.com is using:

Some consumers maintain a "price-quality association," meaning that if a product has a high price, they assume the product must have high quality. This "price-quality association" is the basis for the use of:

Which of the following pricing approaches should be used by a profit-oriented retailer if its demand curve is down-sloping to the right for a while-but then actually bends back to the left at lower prices?

Setting relatively high prices to suggest high-quality or high-status is:

By definition, a markup of $1 on a cost of $2 translates to a markup of 40 percent.

The main advantage that marginal analysis has over most other popular pricing methods is that it:

Which of the following observations is false?

The break-even point is the intersection of the total cost curve and the total profit curve.

Auctions have not proved very effective in determining how much potential customers will (or will not) pay for a product.

Consumers are more likely to be price sensitive when _____.

When a firm's average variable cost is constant-no matter how much is produced-then the firm's:

The text says "markup" means percent of:

A retail store advertises an SLR digital camera for $350. Once bargain hunters come to the store, salespeople point out the disadvantages of the low-priced camera and try to convince them to trade up to a better, and more expensive, unit. This is an example of

At zero output, total variable cost is

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