Question 1

Online auctions (on the Internet) are becoming very popular as a way to determine how much customers are willing to pay for a product.

Accepted Answer

A) True 
 B)False

Question 2

If a retailer's annual stockturn rate shifted to 20 from 5, then selling products costing $100,000 would require ______________ rather than $20,000 in working capital to carry the needed inventory.

Accepted Answer

A)  $10,000 
B)  $80,000 
C)  $8,000 
D)  $500 
E)  $5,000 
A)  $10,000 
B)  $80,000 
C)  $8,000 
D)  $500 
E)  $5,000

Question 3

A retailer who advertises a low price on an item--with no intent to sell that item--but only to attract customers to try to sell more expensive products is using:

Accepted Answer

A)  full-line pricing. 
B)  leader pricing. 
C)  odd-even pricing. 
D)  psychological pricing. 
E)  bait pricing. 
A)  full-line pricing. 
B)  leader pricing. 
C)  odd-even pricing. 
D)  psychological pricing. 
E)  bait pricing.

Question 4

Price lining tends to result in faster turnover, fewer markdowns, quicker sales, and simplified buying.

Accepted Answer

A) True 
 B)False

Question 5

Gross margin is expressed as

Accepted Answer

A)  gross sales minus accounts receivable. 
B)  net sales minus contribution margin. 
C)  net margin minus sales and operating expenses. 
D)  net sales minus administrative expenses. 
E)  net sales minus cost of goods sold. 
A)  gross sales minus accounts receivable. 
B)  net sales minus contribution margin. 
C)  net margin minus sales and operating expenses. 
D)  net sales minus administrative expenses. 
E)  net sales minus cost of goods sold.

Question 6

Wilson sells a basketball to a wholesaler for $16, and the wholesaler applies a 20 percent markup. A retailer then applies a 33.3 percent markup. The final selling price is:

Accepted Answer

A)  $24.53. 
B)  $30.00. 
C)  $25.59. 
D)  $28.00. 
E)  Cannot be determined from the information given. 
A)  $24.53. 
B)  $30.00. 
C)  $25.59. 
D)  $28.00. 
E)  Cannot be determined from the information given.

Question 7

A producer incurred costs of $54,000 for labor and materials and $26,000 for fixed overhead expenses in a year. The firm produced 20,000 units during the year. If the producer desires a profit of $1 per unit in the coming year, what should the producer's selling price be using average-cost pricing?

Accepted Answer

A)  $3.70. 
B)  $2.30. 
C)  $5.00. 
D)  $6.00. 
E)  Cannot be determined from the information provided. 
A)  $3.70. 
B)  $2.30. 
C)  $5.00. 
D)  $6.00. 
E)  Cannot be determined from the information provided.

Question 8

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

Accepted Answer

A) True 
 B)False

Question 9

A firm's total cost increases only when its variable cost increases.

Accepted Answer

A) True 
 B)False

Question 10

All customers have the same reference price for the same basic type of purchase.

Accepted Answer

A) True 
 B)False

Question 11

Regarding break-even analysis, a good marketing manager knows that:

Accepted Answer

A)  a high fixed-cost contribution per unit will lead to high profits. 
B)  assuming a straight-line total revenue curve incorrectly suggests that any quantity can be sold at the assumed price. 
C)  break-even analysis is useless for comparing pricing alternatives. 
D)  the usual straight-line total cost curve applies only when economies of scale exist. 
E)  All of these alternatives are correct. 
A)  a high fixed-cost contribution per unit will lead to high profits. 
B)  assuming a straight-line total revenue curve incorrectly suggests that any quantity can be sold at the assumed price. 
C)  break-even analysis is useless for comparing pricing alternatives. 
D)  the usual straight-line total cost curve applies only when economies of scale exist. 
E)  All of these alternatives are correct.

Question 12

A certain item has a production cost of $24. The manufacturer takes a 25 percent markup, the wholesaler takes a 20 percent markup, and the retailer takes a 50 percent markup. Therefore, the item has a retail selling price of $80.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following applies to "value in use pricing?"

Accepted Answer

A)  How much profit will the firm make? 
B)  How much will the customer save? 
C)  What does a competitor offer? 
D)  How much can the customer afford? 
A)  How much profit will the firm make? 
B)  How much will the customer save? 
C)  What does a competitor offer? 
D)  How much can the customer afford?

Question 14

A disadvantage of average-cost pricing is that it

Accepted Answer

A)  does not consider historical values. 
B)  is a highly complicated method of pricing. 
C)  is rarely a useful input to pricing decisions. 
D)  is easy to lose money with average-cost pricing. 
E)  does not help understand how costs operate at different levels of output. 
A)  does not consider historical values. 
B)  is a highly complicated method of pricing. 
C)  is rarely a useful input to pricing decisions. 
D)  is easy to lose money with average-cost pricing. 
E)  does not help understand how costs operate at different levels of output.

Question 15

Average-cost pricing may lead to losses because there are a variety of costs--and each changes

Accepted Answer

A)  in a similar fashion. 
B)  in a different way as output changes. 
C)  in a similar fashion with time. 
D)  in an exponential manner. 
E)  in a highly predictable and similar manner. 
A)  in a similar fashion. 
B)  in a different way as output changes. 
C)  in a similar fashion with time. 
D)  in an exponential manner. 
E)  in a highly predictable and similar manner.

Question 16

Leader pricing is typically used with well-known, widely used items which are not stocked heavily by consumers.

Accepted Answer

A) True 
 B)False

Question 17

Changes in total cost depend on variations in total variable cost, since total fixed cost stays the same.

Accepted Answer

A) True 
 B)False

Question 18

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

Accepted Answer

A) True 
 B)False

Question 19

Customers are likely to be less price sensitive when:

Accepted Answer

A)  it is easy to compare prices. 
B)  someone else pays the bill. 
C)  the total expenditure is high. 
D)  there are substitutes available. 
E)  their share of the cost is high. 
A)  it is easy to compare prices. 
B)  someone else pays the bill. 
C)  the total expenditure is high. 
D)  there are substitutes available. 
E)  their share of the cost is high.

Question 20

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.

Online auctions (on the Internet) are becoming very popular as a way to determine how much customers are willing to pay for a product.

If a retailer's annual stockturn rate shifted to 20 from 5, then selling products costing $100,000 would require ______________ rather than $20,000 in working capital to carry the needed inventory.

A retailer who advertises a low price on an item--with no intent to sell that item--but only to attract customers to try to sell more expensive products is using:

Price lining tends to result in faster turnover, fewer markdowns, quicker sales, and simplified buying.

Gross margin is expressed as

Wilson sells a basketball to a wholesaler for $16, and the wholesaler applies a 20 percent markup. A retailer then applies a 33.3 percent markup. The final selling price is:

A producer incurred costs of $54,000 for labor and materials and $26,000 for fixed overhead expenses in a year. The firm produced 20,000 units during the year. If the producer desires a profit of $1 per unit in the coming year, what should the producer's selling price be using average-cost pricing?

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

A firm's total cost increases only when its variable cost increases.

All customers have the same reference price for the same basic type of purchase.

Regarding break-even analysis, a good marketing manager knows that:

A certain item has a production cost of $24. The manufacturer takes a 25 percent markup, the wholesaler takes a 20 percent markup, and the retailer takes a 50 percent markup. Therefore, the item has a retail selling price of $80.

Which of the following applies to "value in use pricing?"

A disadvantage of average-cost pricing is that it

Average-cost pricing may lead to losses because there are a variety of costs--and each changes

Leader pricing is typically used with well-known, widely used items which are not stocked heavily by consumers.

Changes in total cost depend on variations in total variable cost, since total fixed cost stays the same.

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

Customers are likely to be less price sensitive when:

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

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

Online auctions (on the Internet) are becoming very popular as a way to determine how much customers are willing to pay for a product.

If a retailer's annual stockturn rate shifted to 20 from 5, then selling products costing $100,000 would require ______________ rather than $20,000 in working capital to carry the needed inventory.

A retailer who advertises a low price on an item--with no intent to sell that item--but only to attract customers to try to sell more expensive products is using:

Price lining tends to result in faster turnover, fewer markdowns, quicker sales, and simplified buying.

Gross margin is expressed as

Wilson sells a basketball to a wholesaler for $16, and the wholesaler applies a 20 percent markup. A retailer then applies a 33.3 percent markup. The final selling price is:

A producer incurred costs of $54,000 for labor and materials and $26,000 for fixed overhead expenses in a year. The firm produced 20,000 units during the year. If the producer desires a profit of $1 per unit in the coming year, what should the producer's selling price be using average-cost pricing?

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

A firm's total cost increases only when its variable cost increases.

All customers have the same reference price for the same basic type of purchase.

Regarding break-even analysis, a good marketing manager knows that:

A certain item has a production cost of $24. The manufacturer takes a 25 percent markup, the wholesaler takes a 20 percent markup, and the retailer takes a 50 percent markup. Therefore, the item has a retail selling price of $80.

Which of the following applies to "value in use pricing?"

A disadvantage of average-cost pricing is that it

Average-cost pricing may lead to losses because there are a variety of costs--and each changes

Leader pricing is typically used with well-known, widely used items which are not stocked heavily by consumers.

Changes in total cost depend on variations in total variable cost, since total fixed cost stays the same.

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

Customers are likely to be less price sensitive when:

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

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