Question 1

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 2

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 3

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 4

Which of the following statements concerning "negotiated price" is FALSE?

Accepted Answer

A)  The negotiated price is set by bargaining between the buyer and the seller. 
B)  Negotiated pricing is not a demand-oriented approach. 
C)  Bargaining may involve the whole marketing mix, not just the price level. 
D)  Sellers must know their costs to negotiate effectively. 
E)  None of these statements about "negotiated price" is FALSE. 
A)  The negotiated price is set by bargaining between the buyer and the seller. 
B)  Negotiated pricing is not a demand-oriented approach. 
C)  Bargaining may involve the whole marketing mix, not just the price level. 
D)  Sellers must know their costs to negotiate effectively. 
E)  None of these statements about "negotiated price" is FALSE.

Question 5

Given the following data, determine the break-even point in units: Total fixed cost = $120,000
Variable cost per unit = $0.60
Selling price per unit = $1.10

Accepted Answer

A)  100,000 
B)  240,000 
C)  200,000 
D)  218,182 
E)  50,000 
A)  100,000 
B)  240,000 
C)  200,000 
D)  218,182 
E)  50,000

Question 6

"Average-cost pricing":

Accepted Answer

A)  will result in losses if actual sales are much higher than expected. 
B)  might cause a firm to charge too high or too low a price--and reduce its profits. 
C)  usually assumes the firm will sell a larger quantity than the year before. 
D)  cannot be profitable--because it ignores demand. 
E)  All of these alternatives are correct. 
A)  will result in losses if actual sales are much higher than expected. 
B)  might cause a firm to charge too high or too low a price--and reduce its profits. 
C)  usually assumes the firm will sell a larger quantity than the year before. 
D)  cannot be profitable--because it ignores demand. 
E)  All of these alternatives are correct.

Question 7

The sum of those changing expenses which are closely related to output is called:

Accepted Answer

A)  total fixed cost. 
B)  total cost. 
C)  total overhead cost. 
D)  total variable cost. 
E)  None of these is a good answer. 
A)  total fixed cost. 
B)  total cost. 
C)  total overhead cost. 
D)  total variable cost. 
E)  None of these is a good answer.

Question 8

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

Accepted Answer

A)  markup 
B)  rebate 
C)  list price 
D)  spiff 
E)  deal 
A)  markup 
B)  rebate 
C)  list price 
D)  spiff 
E)  deal

Question 9

Use this information for questions that refer to the Sporting Products, Inc. (SPI) case. Randy Todd, marketing manager for Sporting Products, Inc. (SPI), is thinking about how changes taking place among retailers in his channel might impact his strategy.
SPI sells the products it produces through wholesalers and retailers. For example, SPI sells basketballs to Wholesale Supply for $8.00. Wholesale Supply uses a 20 percent markup and most of its "sport shop" retailer customers, like Robinson's Sporting Goods, use a 33 percent markup to arrive at the price they charge final consumers. However, one fast growing retail chain, Sports Depot, only uses a 20 percent markup for basketballs, even though it pays Wholesale Supply the same price as other retailers. Furthermore, Sports Depot occasionally lowers the price of basketballs and sells them at cost--to draw customers into its stores and stimulate sales of its pricey basketball shoes.
Sports Depot is also using other pricing approaches that are different from the sports shops that usually handle SPI products. For example, Sports Depot prices all of its baseball gloves at $20, $40, or $60--with no prices in between. There are three big bins - one for each price point.
Todd is also curious about how Sports Depot's new strategy to increase sales of tennis balls will work out. The basic idea is to sell tennis balls in large quantities to nonprofit groups who resell the balls to raise money. For example, a service organization at a local college bought 2,000 tennis balls printed with the college logo. Sports Depot charged $.50 each for the tennis balls-plus a $500 one-time charge for the stamp to print the logo. The service group plans to resell the tennis balls for $2.50 each and contribute the profits to a shelter for the homeless.
Todd is not certain if Sports Depot ideas will affect SPI's plans. For example, SPI is considering adding tennis racquets to the lines it produces. This would require a $500,000 addition to its factory as well as the purchase of new equipment that costs $1,000,000. The variable cost to produce a tennis racquet would be $20, but Todd thinks that SPI could sell the racquet at a wholesale price of $40 each. That would allow most retailers to add their normal markup and make a profit. However, if Sports Depot sells the racquet at a lower than normal price other retailers might decide to carry it.
What is the final selling price Robinson's Sporting Goods charges for a SPI basketball?

Accepted Answer

A)  $10.00 
B)  $15.00 
C)  $15.75 
D)  $20.80 
E)  None of these alternatives is correct. 
A)  $10.00 
B)  $15.00 
C)  $15.75 
D)  $20.80 
E)  None of these alternatives is correct.

Question 10

The number of times an intermediary's average inventory is sold in a year is called the:

Accepted Answer

A)  stockturn rate. 
B)  asset factor. 
C)  inventory ratio. 
D)  markup ratio. 
E)  ROI (return on inventory). 
A)  stockturn rate. 
B)  asset factor. 
C)  inventory ratio. 
D)  markup ratio. 
E)  ROI (return on inventory).

Question 11

Regarding "full-line pricing," which of the following statements is TRUE?

Accepted Answer

A)  A good marketing manager usually tries to price products in a line so that the prices will seem logically related and make sense to target customers. 
B)  The marketing manager should try to cover all costs on the whole product line. 
C)  Most customers seem to feel that prices in a product line should be somewhat related to cost. 
D)  Not all companies that make a line of products must use full-line pricing. 
E)  All of these statements about "full-line pricing" are TRUE. 
A)  A good marketing manager usually tries to price products in a line so that the prices will seem logically related and make sense to target customers. 
B)  The marketing manager should try to cover all costs on the whole product line. 
C)  Most customers seem to feel that prices in a product line should be somewhat related to cost. 
D)  Not all companies that make a line of products must use full-line pricing. 
E)  All of these statements about "full-line pricing" are TRUE.

Question 12

A low stockturn decreases inventory carrying cost and frees up working capital.

Accepted Answer

A) True 
 B)False

Question 13

When the end benefit of a purchase is significant to the customer, he is likely to be less price sensitive.

Accepted Answer

A) True 
 B)False

Question 14

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 15

A firm in monopolistic competition with a down-sloping demand curve:

Accepted Answer

A)  does not have to worry about price competition due to the nature of its demand curve. 
B)  can use marginal analysis to help it maximize profits. 
C)  will have to charge the "market price" which is set by the intersection of industry supply and demand. 
D)  could use marginal analysis to compare alternatives--but this would not help in pricing because this method focuses on selling one more unit and therefore ignores total profitability. 
E)  None of these alternatives is correct. 
A)  does not have to worry about price competition due to the nature of its demand curve. 
B)  can use marginal analysis to help it maximize profits. 
C)  will have to charge the "market price" which is set by the intersection of industry supply and demand. 
D)  could use marginal analysis to compare alternatives--but this would not help in pricing because this method focuses on selling one more unit and therefore ignores total profitability. 
E)  None of these alternatives is correct.

Question 16

"Stockturn rate" means:

Accepted Answer

A)  the number of days required to sell a given output of products. 
B)  the amount of time needed to sell every item in a retailer's inventory. 
C)  the number of times the average inventory is sold in a year. 
D)  the rate at which products enter and leave an intermediary's establishment. 
E)  None of these is a good definition of "stockturn rate." 
A)  the number of days required to sell a given output of products. 
B)  the amount of time needed to sell every item in a retailer's inventory. 
C)  the number of times the average inventory is sold in a year. 
D)  the rate at which products enter and leave an intermediary's establishment. 
E)  None of these is a good definition of "stockturn rate."

Question 17

Regarding pricing:

Accepted Answer

A)  the use of prestige and psychological pricing shows that most retailers do not consider demand when setting prices. 
B)  bait pricing tries to attract customers on the high end of a demand curve. 
C)  the FTC considers bait pricing a deceptive act and has banned its use in interstate commerce. 
D)  leader-priced items are priced very low to get customers into the store--not to sell these items. 
E)  All of these alternatives are correct. 
A)  the use of prestige and psychological pricing shows that most retailers do not consider demand when setting prices. 
B)  bait pricing tries to attract customers on the high end of a demand curve. 
C)  the FTC considers bait pricing a deceptive act and has banned its use in interstate commerce. 
D)  leader-priced items are priced very low to get customers into the store--not to sell these items. 
E)  All of these alternatives are correct.

Question 18

Marketing managers wish they knew more about price sensitivity, but so far marketing research has been of little help in identifying factors that influence customers.

Accepted Answer

A) True 
 B)False

Question 19

The basic problem with the average-cost approach is that it

Accepted Answer

A)  does not consider cost variations at different levels of output. 
B)  does not consider historical values. 
C)  does not add a reasonable markup to the average cost of a product. 
D)  is not commonly used. 
E)  is a complex method. 
A)  does not consider cost variations at different levels of output. 
B)  does not consider historical values. 
C)  does not add a reasonable markup to the average cost of a product. 
D)  is not commonly used. 
E)  is a complex method.

Question 20

Total fixed cost:

Accepted Answer

A)  is the sum of all expenses which are closely related to output. 
B)  is the sum of those costs which do not change in total no matter how much is produced. 
C)  may vary in the short run--but is more or less fixed in the long run. 
D)  is the sum of all costs of manufacturing and distributing a product. 
E)  would be zero if the quantity produced were zero. 
A)  is the sum of all expenses which are closely related to output. 
B)  is the sum of those costs which do not change in total no matter how much is produced. 
C)  may vary in the short run--but is more or less fixed in the long run. 
D)  is the sum of all costs of manufacturing and distributing a product. 
E)  would be zero if the quantity produced were zero.

The BEP, in units, can be found by dividing

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

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

Which of the following statements concerning "negotiated price" is FALSE?

Given the following data, determine the break-even point in units: Total fixed cost = $120,000 Variable cost per unit = $0.60 Selling price per unit = $1.10

"Average-cost pricing":

The sum of those changing expenses which are closely related to output is called:

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

The number of times an intermediary's average inventory is sold in a year is called the:

Regarding "full-line pricing," which of the following statements is TRUE?

A low stockturn decreases inventory carrying cost and frees up working capital.

When the end benefit of a purchase is significant to the customer, he is likely to be less price sensitive.

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

A firm in monopolistic competition with a down-sloping demand curve:

"Stockturn rate" means:

Regarding pricing:

Marketing managers wish they knew more about price sensitivity, but so far marketing research has been of little help in identifying factors that influence customers.

The basic problem with the average-cost approach is that it

Total fixed cost:

Marketing39s 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

Promotion - Introduction to Integrated Marketing Communications

Personal Selling and Customer Service

Advertising, Publicity, and Sales Promotion

Pricing Objectives and Policies

Ethical Marketing in a Consumer-Oriented World: Appraisal and Challenges

Economics Fundamentals

Marketing Arithmetic

Filters

Exam 17: Price Setting in the Business World

The BEP, in units, can be found by dividing

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

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

Which of the following statements concerning "negotiated price" is FALSE?

Given the following data, determine the break-even point in units: Total fixed cost = $120,000 Variable cost per unit = $0.60 Selling price per unit = $1.10

"Average-cost pricing":

The sum of those changing expenses which are closely related to output is called:

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

The number of times an intermediary's average inventory is sold in a year is called the:

Regarding "full-line pricing," which of the following statements is TRUE?

A low stockturn decreases inventory carrying cost and frees up working capital.

When the end benefit of a purchase is significant to the customer, he is likely to be less price sensitive.

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

A firm in monopolistic competition with a down-sloping demand curve:

"Stockturn rate" means:

Regarding pricing:

Marketing managers wish they knew more about price sensitivity, but so far marketing research has been of little help in identifying factors that influence customers.

The basic problem with the average-cost approach is that it

Total fixed cost:

Marketing39s 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

Promotion - Introduction to Integrated Marketing Communications

Personal Selling and Customer Service

Advertising, Publicity, and Sales Promotion

Pricing Objectives and Policies

Ethical Marketing in a Consumer-Oriented World: Appraisal and Challenges

Economics Fundamentals

Marketing Arithmetic

Filters