Question 1

With complementary product pricing, different price levels are set on different products because the products are targeted at different market segments.

Accepted Answer

A) True 
 B)False

Question 2

"Psychological pricing" involves setting prices which end in certain numbers, while "odd-even pricing" is setting prices which have special appeal to target customers.

Accepted Answer

A) True 
 B)False

Question 3

Marginal analysis

Accepted Answer

A)  reveals the range of prices that should be profitable. 
B)  can be used to set prices, but it does not give you any idea what quantity might be sold at that price. 
C)  does not need an estimate of the demand curve. 
D)  usually suggests the same price as break-even analysis. 
E)  None of these alternatives is correct. 
A)  reveals the range of prices that should be profitable. 
B)  can be used to set prices, but it does not give you any idea what quantity might be sold at that price. 
C)  does not need an estimate of the demand curve. 
D)  usually suggests the same price as break-even analysis. 
E)  None of these alternatives is correct.

Question 4

A producer with only one product has total fixed costs of $15,000 per month. In addition, it cost the producer $100 in variable costs to produce each unit of his product (raw materials and direct labor cost). The producer charges his wholesalers $125 per unit. What is the sales amount to break even?

Accepted Answer

A)  $70,000 
B)  $75,000 
C)  $80,000 
D)  $85,000 
E)  $90,000 
A)  $70,000 
B)  $75,000 
C)  $80,000 
D)  $85,000 
E)  $90,000

Question 5

TopKnotch Mfg. Co. has a production cost of $280. It sells its product to a wholesaler for $400. The wholesaler then sells the item to retailers for $500 and the retailers sell the item for $1,000. Which of the following is true about this "markup chain?"

Accepted Answer

A)  The wholesaler's markup is 25 percent. 
B)  The manufacturer is taking a markup of 30 percent. 
C)  The retailers' markup is 100 percent. 
D)  None of these alternatives is true for this markup chain. 
A)  The wholesaler's markup is 25 percent. 
B)  The manufacturer is taking a markup of 30 percent. 
C)  The retailers' markup is 100 percent. 
D)  None of these alternatives is true for this markup chain.

Question 6

When Walgreens Drugstore advertises one price for the cost of a roll of film and the cost of processing it, it is using

Accepted Answer

A)  complementary product pricing. 
B)  flexible pricing. 
C)  product-bundle pricing. 
D)  a one-price policy. 
E)  bait pricing. 
A)  complementary product pricing. 
B)  flexible pricing. 
C)  product-bundle pricing. 
D)  a one-price policy. 
E)  bait pricing.

Question 7

Total cost:

Accepted Answer

A)  increases directly with increases in total variable cost. 
B)  is zero at zero output. 
C)  is fixed in total no matter how much is produced. 
D)  increases directly with increases in total fixed cost. 
E)  None of these alternatives is correct. 
A)  increases directly with increases in total variable cost. 
B)  is zero at zero output. 
C)  is fixed in total no matter how much is produced. 
D)  increases directly with increases in total fixed cost. 
E)  None of these alternatives is correct.

Question 8

The major disadvantage of price lining is that it is complicated for both clerks and customers.

Accepted Answer

A) True 
 B)False

Question 9

Blue Ridge Weavers wants to set its selling price on an item so that the retail list price will be $50--taking into account the usual markups of 10 percent at wholesale and 30 percent at retail. At what price should Blue Ridge Weavers sell the item?

Accepted Answer

A)  $32.50 
B)  $31.50 
C)  $35.00 
D)  $34.00 
E)  $38.00 
A)  $32.50 
B)  $31.50 
C)  $35.00 
D)  $34.00 
E)  $38.00

Question 10

A firm with a stockturn rate of 4 sells products that cost it $100,000. This requires _____ worth of inventory.

Accepted Answer

A)  $25,000 
B)  $20,000 
C)  $80,000 
D)  $400,000 
E)  $500,000 
A)  $25,000 
B)  $20,000 
C)  $80,000 
D)  $400,000 
E)  $500,000

Question 11

Business customers are sometimes less price sensitive if there are switching costs.

Accepted Answer

A) True 
 B)False

Question 12

Bid pricing is offering a specific price for each possible job, rather than setting a price that applies to all potential customers.

Accepted Answer

A) True 
 B)False

Question 13

Average-cost pricing consists of adding a 20 percent markup to the average cost of an item.

Accepted Answer

A) True 
 B)False

Question 14

A major problem with average-cost pricing is that it does not allow for cost variations at different levels of output.

Accepted Answer

A) True 
 B)False

Question 15

A producer makes an item for $32 and sells it with a 50 percent markup to a wholesaler. The wholesaler then applies a 20 percent markup. A retailer then uses a 60 percent markup. The final retail selling price is:

Accepted Answer

A)  $200.00. 
B)  $73.60. 
C)  $64.00. 
D)  $80.00. 
E)  Cannot be determined without stockturn information. 
A)  $200.00. 
B)  $73.60. 
C)  $64.00. 
D)  $80.00. 
E)  Cannot be determined without stockturn information.

Question 16

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 17

Customers tend to be more price sensitive

Accepted Answer

A)  the greater the total expenditure. 
B)  when someone else pays the bill. 
C)  when someone else shares the cost. 
D)  the greater the significance of the end benefit of the purchase. 
E)  the lesser the total expenditure. 
A)  the greater the total expenditure. 
B)  when someone else pays the bill. 
C)  when someone else shares the cost. 
D)  the greater the significance of the end benefit of the purchase. 
E)  the lesser the total expenditure.

Question 18

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

Accepted Answer

A) True 
 B)False

Question 19

_____ means offering a specific price for each possible job rather than setting a price that applies for all customers.

Accepted Answer

A)  Price lining 
B)  Odd-even pricing 
C)  Product bundle pricing 
D)  Bid pricing 
E)  Price leading 
A)  Price lining 
B)  Odd-even pricing 
C)  Product bundle pricing 
D)  Bid pricing 
E)  Price leading

Question 20

Walgreens Drugstores buys a bottle of shampoo from a wholesaler for $3.25 and then places it on a shelf with a price tag of $4.64. What is Walgreens' markup on selling price (expressed as a percent)?

Accepted Answer

A)  20 percent 
B)  26 percent 
C)  30 percent 
D)  43 percent 
E)  48 percent 
A)  20 percent 
B)  26 percent 
C)  30 percent 
D)  43 percent 
E)  48 percent

With complementary product pricing, different price levels are set on different products because the products are targeted at different market segments.

"Psychological pricing" involves setting prices which end in certain numbers, while "odd-even pricing" is setting prices which have special appeal to target customers.

Marginal analysis

A producer with only one product has total fixed costs of $15,000 per month. In addition, it cost the producer $100 in variable costs to produce each unit of his product (raw materials and direct labor cost). The producer charges his wholesalers $125 per unit. What is the sales amount to break even?

TopKnotch Mfg. Co. has a production cost of $280. It sells its product to a wholesaler for $400. The wholesaler then sells the item to retailers for $500 and the retailers sell the item for $1,000. Which of the following is true about this "markup chain?"

When Walgreens Drugstore advertises one price for the cost of a roll of film and the cost of processing it, it is using

Total cost:

The major disadvantage of price lining is that it is complicated for both clerks and customers.

Blue Ridge Weavers wants to set its selling price on an item so that the retail list price will be $50--taking into account the usual markups of 10 percent at wholesale and 30 percent at retail. At what price should Blue Ridge Weavers sell the item?

A firm with a stockturn rate of 4 sells products that cost it $100,000. This requires _____ worth of inventory.

Business customers are sometimes less price sensitive if there are switching costs.

Bid pricing is offering a specific price for each possible job, rather than setting a price that applies to all potential customers.

Average-cost pricing consists of adding a 20 percent markup to the average cost of an item.

A major problem with average-cost pricing is that it does not allow for cost variations at different levels of output.

A producer makes an item for $32 and sells it with a 50 percent markup to a wholesaler. The wholesaler then applies a 20 percent markup. A retailer then uses a 60 percent markup. The final retail selling price is:

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

Customers tend to be more price sensitive

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

_____ means offering a specific price for each possible job rather than setting a price that applies for all customers.

Walgreens Drugstores buys a bottle of shampoo from a wholesaler for $3.25 and then places it on a shelf with a price tag of $4.64. What is Walgreens' markup on selling price (expressed as a percent)?

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

With complementary product pricing, different price levels are set on different products because the products are targeted at different market segments.

"Psychological pricing" involves setting prices which end in certain numbers, while "odd-even pricing" is setting prices which have special appeal to target customers.

Marginal analysis

TopKnotch Mfg. Co. has a production cost of $280. It sells its product to a wholesaler for $400. The wholesaler then sells the item to retailers for $500 and the retailers sell the item for $1,000. Which of the following is true about this "markup chain?"

When Walgreens Drugstore advertises one price for the cost of a roll of film and the cost of processing it, it is using

Total cost:

The major disadvantage of price lining is that it is complicated for both clerks and customers.

Blue Ridge Weavers wants to set its selling price on an item so that the retail list price will be $50--taking into account the usual markups of 10 percent at wholesale and 30 percent at retail. At what price should Blue Ridge Weavers sell the item?

A firm with a stockturn rate of 4 sells products that cost it $100,000. This requires _____ worth of inventory.

Business customers are sometimes less price sensitive if there are switching costs.

Bid pricing is offering a specific price for each possible job, rather than setting a price that applies to all potential customers.

Average-cost pricing consists of adding a 20 percent markup to the average cost of an item.

A major problem with average-cost pricing is that it does not allow for cost variations at different levels of output.

A producer makes an item for $32 and sells it with a 50 percent markup to a wholesaler. The wholesaler then applies a 20 percent markup. A retailer then uses a 60 percent markup. The final retail selling price is:

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

Customers tend to be more price sensitive

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

_____ means offering a specific price for each possible job rather than setting a price that applies for all customers.

Walgreens Drugstores buys a bottle of shampoo from a wholesaler for $3.25 and then places it on a shelf with a price tag of $4.64. What is Walgreens' markup on selling price (expressed as a percent)?

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