Deck 10: Pricing

Question 1

What is marginal revenue?

A)the total change in revenue that results from a large change in product price
B)the change in total revenue that results from selling one additional unit of a product
C)the change in total revenue that results from producing one additional unit
D)a percentage change in price that results from a change in quantity demanded
E)the total change in revenue that results from a small change in product price

Answer 1

B

Question 2

The amount of something (money,time,or effort)that a buyer exchanges with a seller to obtain a product is referred to in marketing terms as a

A)value.
B)renumeration.
C)fee.
D)price.
E)worth.

Answer 2

D

Question 3

Volume maximization is also referred to as

A)profit maximization.
B)penetration pricing.
C)survival pricing.
D)target pricing.
E)price skimming.

Answer 3

B

Question 4

A measure of price sensitivity that gives the percentage change in quantity demanded in response to a percentage change in price is known as

A)marginal revenue.
B)break-even analysis.
C)price elasticity of supply.
D)profit maximization.
E)price elasticity of demand.

Question 5

Joey set up a lawn-mowing business in his neighborhood.He currently has 7 customers that want their lawns mowed each week for which he charges them $25.00 each.Joey spends $10.00 a week in gas and another $17.00 in yard waste bags and stickers.What is Joey's weekly profit?

A)$158.00
B)$148.00
C)$88.00
D)$105.00
E)$175.00

Question 6

One of the most important concepts in marketing is the price elasticity of demand,which is the

A)percentage a product is marked up in response to consumer demand.
B)point at which the costs of producing a product equal the revenue made from selling the product.
C)percentage change in quantity demanded in response to a percentage change in price.
D)degree to which the price of a product affects consumers' purchasing behavior.
E)price that consumers consider reasonable and fair for a product.

Question 7

Variable costs are defined as costs that

A)vary depending on the number of units produced or sold.
B)change only during economic downturns.
C)vary depending on the advertising budget for the product.
D)remain constant even though the product offering varies.
E)vary depending on the type of material used in production.

Question 8

When Apple released its first iPhone in 2007,it charged customers $599.Shortly thereafter,it reduced the price to $399 for the exact same device.Apple's decision to set a relatively high price for a period of time after the product launched and then decrease the price to a level that would be more sustainable over time reflects which pricing strategy?

A)volume maximization
B)target pricing
C)underpricing
D)survival pricing
E)profit maximization

Question 9

Compare the following statements and select the one that is accurate regarding a profit maximization strategy.

A)A profit maximization strategy sets prices low to encourage a greater volume of purchases and lower the level of involvement for the consumer.
B)Profit maximization should not be used as a permanent pricing objective,but is effective in allowing a firm to endure a difficult time.
C)A profit maximization strategy is best used when a product is in the growth and maturity stage of the product life cycle.
D)Profit maximization assumes that customers value a product's differentiating attributes and are willing to pay a higher price to take advantage of those attributes.
E)For a profit maximization strategy to work over the long term,the firm must have a significant cost or resource advantage over competitors.

Question 10

One of the most important strategic decisions a firm faces is _______ because it reflects the value the product delivers to consumers as well as the value it captures for the firm.

A)promotion
B)production management
C)pricing
D)advertising
E)profit management

Question 11

Joey set up a lawn-mowing business in his neighborhood.He currently has 7 customers that want their lawns mowed each week,for which he charges $25.00 each.Joey spends $10.00 a week in gas and another $17.00 in yard waste bags and stickers.What is Joey's weekly revenue?

A)$88.00
B)$105.00
C)$158.00
D)$175.00
E)$148.00

Question 12

In November,the appliance store priced its front-loading washing machines at $899.00 and sold 50 units.In December they reduced the price to $799.00 and sold 53 units.Which of the following statements is accurate regarding this situation?

A)Demand is elastic and total revenue fell from November to December.
B)Demand is inelastic and total revenue fell from November to December.
C)Demand is elastic and total revenue rose from November to December.
D)Demand is inelastic and total revenue rose from November to December.
E)Demand is neither elastic nor inelastic,but revenue rose from November to December.

Question 13

The first step in the price-setting process is to

A)compare alternatives.
B)analyze the competitive price environment.
C)determine the costs.
D)define the pricing objectives.
E)evaluate demand.

Question 14

The degree to which the price of a product affects consumers' purchasing behavior is referred to as

A)price sensitivity.
B)price elasticity.
C)marginal pricing.
D)dynamic pricing.
E)price relevancE.

Question 15

For the first quarter of the year,the price of the company's most popular e-reader was $129.00.The company sold 750,000 units at this price.For the second quarter,the company decided to reduce the price of the e-reader to $109.00.At this price point,the company sold 1.5 million units indicating that demand for the product is

A)unstable.
B)stable.
C)marginal.
D)elastic.
E)inelastic.

Question 16

In the price-setting process,the next step after demand has been evaluated is to

A)define the pricing objectives.
B)choose a price.
C)analyze the competitive price environment.
D)determine the costs.
E)evaluate the alternatives.

Question 17

According to your text,which of the following is not a fixed cost?

A)insurance
B)salaries
C)advertising costs
D)material
E)rent

Question 18

Consumers will be more price sensitive when

A)some or all of the purchase price is paid by others.
B)the cost of not getting the expected benefits of a purchase is high.
C)the price they have to pay is more than they anticipated.
D)they perceive the price as a gain rather than a forgone loss.
E)a product's price is within the range that they perceive as fair or reasonablE.

Question 19

Which of the following accurately describes break-even analysis?

A)the process of calculating the percentage change in quantity demanded in response to a percentage change in price
B)the process of calculating the point at which fixed costs and variable costs are equal
C)the process of calculating the sales volume needed to achieve a profit of zero
D)the process of calculating the difference between marginal revenue and marginal cost
E)the process of calculating how many units of product must be sold to cover fixed costs

Question 20

Which of the following is a variable cost?

A)salaries
B)advertising cost
C)insurance
D)delivery cost
E)rent

Question 21

According to your text,one of the most common mistakes in modern pricing is

A)setting the price too high on an introductory product.
B)charging someone less than they are willing to pay.
C)pricing items based on consumers' reference prices.
D)failing to correctly calculate the break-even point.
E)covering fixed costs while ignoring variable costs.

Question 22

A pricing tactic in which a firm prices products a few cents below the next dollar amount is called

A)perceived pricing.
B)even pricing.
C)deal pricing.
D)bargain pricing.
E)odd pricing.

Question 23

Scotts Fertilizer has a 4-step program for lawn care.Each step features a different product.Scotts sells the fertilizer as a set containing one bag of each of the 4-step products.If Scotts decided to sell each product individually rather than as a set,it would be an example of which pricing strategy?

A)dynamic pricing
B)unbundling
C)underpricing
D)minimal pricing
E)dumping

Question 24

Which of the following statements regarding break-even analysis is true?

A)Break-even analysis reflects how demand may be affected at different price levels.
B)Break-even analysis does not measure price sensitivity.
C)Break-even analysis does not measure the cost of sales.
D)Break-even analysis is an accurate measure of variable costs.
E)Break-even analysis is an accurate measure of fixed costs.

Question 25

Since consumers have the tendency to compare prices on almost everything they buy,marketers setting prices should attempt to capitalize on this tendency by determining the price consumers will consider fair and reasonable for a product.This is known as the

A)reference price.
B)reasonable price.
C)break-even point.
D)dynamic price.
E)benchmark pricE.

Question 26

One of the most commonly used pricing tactics,markup pricing,is also referred to as

A)dynamic pricing.
B)profit margin pricing.
C)standard pricing.
D)cost-plus pricing.
E)profit-plus pricing.

Question 27

What are two of the most common and effective strategies marketers can use for raising prices?

A)markup pricing and escalator clauses
B)reference pricing and unbundling
C)prestige pricing and dynamic pricing
D)odd pricing and prestige pricing
E)unbundling and escalator clauses

Question 28

Greg is the owner of a full-service car wash.For the month of December he paid $2,000 in rent,$700 in utilities,$2,950 in salaries,and $50 on advertising.A full service car wash costs $10.50.Unit variable costs per car wash are $2.50.How many full-service car washes does Greg need to sell to break-even each month?

A)625
B)713
C)476
D)543
E)619

Question 29

The price strategy of unbundling involves

A)pricing products a few cents below the next dollar amount.
B)placing two or more products together in a package and selling them at a single price.
C)adding a certain amount to the cost of each item in a product set.
D)constantly updating prices to reflect changes in supply or demanD.
E)separating out the individual goods that make up a product and pricing each one individually.

Question 30

Charging someone less than they are willing to pay is a practice referred to as

A)minimal pricing.
B)price skimming.
C)survival pricing.
D)dumping.
E)underpricing.

Question 31

As a pricing tactic,markup pricing is

A)the most effective pricing tactic overall.
B)good at capturing the value consumers place on products.
C)not very effective at maximizing profits.
D)difficult to implement.
E)a good measure of price sensitivity.

Question 32

The amount a product sells for above the total cost of the product itself is called

A)the price elasticity of demand.
B)marginal cost.
C)marginal revenue.
D)the break-even point.
E)profit margin.

Question 33

Justine went to the specialty grocery store by her office after work.When looking at the offerings at the meat counter,she was surprised to see ground beef selling for $4.49/lb.At her normal grocery store,she can get the same quality beef for $3.29/lb. ,a price Justine feels is reasonable.$3.29/lb.for ground beef is Justine's

A)reference price.
B)reasonable price.
C)benchmark price.
D)break-even point.
E)dynamic pricE.

Question 34

According to your text,pricing resembles a game of

A)cards.
B)blackjack.
C)chess.
D)roulette.
E)checkers.

Question 35

Which of the following provides the best source of information for marketers regarding how high they can price a product before customers stop considering the product a good value?

A)historical pricing data
B)salespeople
C)advertising staff
D)customer service personnel
E)sales forecasts

Question 36

Bowman's shoe store just received a shipment of dress boots.The manufacturer's suggested retail price for the boots is $150.00,but Bowman's decides to price the boots at $149.95.What pricing tactic is Bowman's most likely using?

A)dynamic pricing
B)yield pricing
C)perceived pricing
D)odd pricing
E)prestige pricing

Question 37

A section in a contract that ensures that providers of goods and services do not encounter unreasonable financial hardship as a result of uncontrollable increases in the costs of or decreases in the availability of something required to deliver products to customers is referred to as a(n)

A)protective clause.
B)escalator clause.
C)hardship clause.
D)control clause.
E)materials clausE.

Question 38

Prestige pricing involves

A)constantly updating prices to reflect changes in supply or demand.
B)pricing generic label goods at the same price as designer goods.
C)pricing a product higher than competitors to signal that it is of higher quality.
D)separating out the individual goods that make up a product and pricing each one individually.
E)adding a certain amount to the cost of each item in a product set.

Question 39

What can be said regarding the role of industry structure on setting price?

A)In an industry in which there are many buyers and sellers,the pricing impact of any single firm will be fairly small.
B)In industry in which there are many buyers and sellers,the pricing impact of any single firm will be quite large.
C)Marketers should make pricing decisions irrespective of whether there are many or few competitors in the industry.
D)In an industry in which a small number of firms compete,the pricing impact of any single firm will be fairly small.
E)In an industry in which there are many buyers and sellers,firms will typically match the price of competitors.

Question 40

Which of the following statements regarding pricing is true?

A)Marketers should keep prices low during the introductory stage of the product life cycle.
B)Choosing a price is a one-time decision that is made for each individual product.
C)Pricing strategies should be reevaluated throughout the product life cycle.
D)Initiating price increases is one of the least challenging aspects of pricing.
E)A price-skimming strategy is often used during the growth and maturity stages of the product life cyclE.

Question 41

The sale of branded products through legal but unauthorized distribution channels is referred to as the

A)white market.
B)gray market.
C)red market.
D)black market.
E)blue market.

Question 42

Which of the following statements regarding the gray market is true?

A)The gray market involves the illegal buying and selling of goods.
B)The interconnected nature of world economies has made it easier for firms to track gray market exchanges.
C)Gray market exchanges occur when the price of an item is the same in both countries where the exchange occurs.
D)Gray market goods allow consumers to purchase items for less than they could normally.
E)The gray market is a benefit for manufacturers,but not for consumers.

Question 43

Sunny Pines campground,located in the Midwest,promotes the months of September and October as its value camping months.During this time,it offers reduced rates on camper rentals and campgrounds.It does this,in part,because the weather is not as favorable for camping at this time.The pricing tactic Sunny Pines is using to encourage camping during these months is most likely

A)price bundling.
B)prestige pricing.
C)odd pricing.
D)seasonal discounts.
E)unbundling.

Question 44

Which of the following has allowed for easier import/export transactions between the United States,Mexico,and Canada?

A)the implementation of embargoes
B)the black market
C)the gray market
D)the implementation of tariffs
E)the absence of tariffs

Question 45

If a resort wanted to promote visitors to come during its off-peak times,it would most likely choose which pricing tactic?

A)prestige pricing
B)price skimming
C)odd pricing
D)price bundling
E)seasonal discounts

Question 46

For an airline,the price of economy-class seats on any given flight may fluctuate over time.For example,the airline may try to fill economy-class seats by lowering the price as the day of the flight draws closer,or try to fill business-class seats first by raising prices on economy tickets.This is an example of

A)dynamic pricing.
B)seasonal discounts.
C)market pricing.
D)price skimming.
E)odd pricing.

Question 47

The illegal buying and selling of products outside of sanctioned channels is referred to as the

A)gray market.
B)blue market.
C)white market.
D)red market.
E)black market.

Question 48

When Sony launched its new PS4 gaming system,the product was sold as a package that included the game console,game controllers,wireless headset,and one video game.This is an example of

A)survival pricing.
B)price bundling.
C)underpricing.
D)yield management.
E)price skimming.

Question 49

Taxes on imports and exports between countries are called

A)allowances.
B)tariffs.
C)sanctions.
D)market equalizers.
E)embargoes.

Question 50

Your text notes that technology has helped to shift the balance of power from companies to customers.Which of the following exemplifies this statement?

A)The Internet allows companies to advertise on more than one platform.
B)Companies can use social networking sites to help them better target their audiences.
C)The Internet has made it possible for customers to comparison shop for products.
D)Automated production systems lead to more efficient and cost-effective manufacturing processes.
E)Data gathered at the point-of-sale can be used by companies to target customers for new products.

Question 51

A couple living in the United States travels to China and buys huge amounts of designer purses for a much lower price than could be purchased at home.They import the purses back into the States where they sell them for less than the normal market price.The purses are considered to be

A)black market goods.
B)gray market goods.
C)illegal imports.
D)contrabanD.
E)smuggled goods.

Question 52

Fenton,a marketer for a major retailer,uses the Internet to aggressively review the prices of products sold by his competitors.Accordingly,he constantly updates his prices based on his findings and what changes he sees in consumer demand.What type of pricing strategy is Fenton most likely using?

A)flexible pricing
B)demand pricing
C)market pricing
D)dynamic pricing
E)penetration pricing

Question 53

Which of the following is NOT true regarding global pricing?

A)Firms do not encounter any unique challenges when pricing products globally.
B)Economic conditions over the past decade have impacted global pricing for products.
C)Technological advancements have made global pricing more transparent.
D)Pricing is a critical component of a successful global marketing strategy.
E)Historically,companies have set prices for products sold internationally higher than the same products sold domestically.

Question 54

A pricing strategy that involves constantly updating prices to reflect changes in supply,demand,or market conditions is called

A)dynamic pricing.
B)market pricing.
C)penetration pricing.
D)demand pricing.
E)flexible pricing.

Question 55

What technological advancement created for mobile devices has unleashed a new era of pricing transparency for consumers?

A)SIM cards
B)mobile banking
C)wireless apps
D)GPS systems
E)text messaging

Question 56

Yield management is a strategy for maximizing a firm's

A)revenue.
B)demand.
C)operating costs.
D)supply.
E)production.

Question 57

Recent research indicates that approximately _______ of consumers search for and purchase a low-priced product using an in-store shopping app or online search engine.

A)5%
B)20%
C)40%
D)75%
E)90%

Question 58

All of the following are advantages of using a price bundling strategy except

A)it can lead to higher profits for the firm.
B)it leads to reduced selling costs.
C)it benefits the consumer more than the firm.
D)bundled packages can be sold for a higher price.
E)it leads to reduced advertising costs.

Question 59

A strategy in which two or more products are packaged together and sold at a single price is called price

A)pushing.
B)grouping.
C)skimming.
D)bundling.
E)packaging.

Question 60

If luxury brands such as Versace clothing,Lexus automobiles,and Dom Perignon champagne wanted to promote an image of superior quality and exclusivity to customers,they would most likely use which pricing tactic?

A)odd pricing
B)cost-plus pricing
C)luxury pricing
D)prestige pricing
E)dynamic pricing

Question 61

_____ _____ is a pricing strategy that involves setting a relatively high price for a period of time after the product launches.

Question 62

The three largest manufacturers of solenoid valves for plumbing applications conspired together so that all three firms would charge the same price for a 3-way valve.This is an example of

A)price inflation.
B)predatory pricing.
C)deceptive pricing.
D)price fixing.
E)price discrimination.

Question 63

Because it could be considered an attempt to create a monopoly,which pricing strategy is illegal under U.S.law but is difficult to prove?

A)predatory pricing
B)deceptive pricing
C)price fixing
D)price inflation
E)price discrimination

Question 64

Which of the following established the Federal Trade Commission,giving it the authority to enforce laws aimed at prohibiting unfair methods of competition?

A)the Wheeler-Lea Act
B)the Federal Trade Commission Act
C)the Robinson-Patman Act
D)the Sherman Antitrust Act
E)the Clayton Antitrust Act

Question 65

A new Home Depot opened up down the street from Hank's Hardware and has drastically reduced prices on many of the same products that Hank sells,forcing him to go out of business.After Hank closed his store,he noticed that Home Depot began raising its prices to more normal levels.This is an example of

A)predatory pricing.
B)deceptive pricing.
C)price inflation.
D)price fixing.
E)price discrimination.

Question 66

Because it reflects the value the product delivers to consumers as well as the value it captures for the firm,_______ is one of the most important strategic decisions a firm faces.

Question 67

According to your text,which of the elements of the marketing mix is one of the most watched and regulated activities?

A)place
B)product
C)price
D)profit
E)promotion

Question 68

The first step in setting price is to clearly define the pricing _______.

Question 69

Useful as a temporary means of staying in business,_______ pricing is the process of lowering prices to the point at which revenue just covers costs,allowing the business to endure a difficult time.

Question 70

The strategy in which a company sells its exports to another country at a lower price than it sells the same product in its domestic market is referred to as

A)mass exporting.
B)survival pricing.
C)dumping.
D)the gray market.
E)bundling.

Question 71

Dumping occurs when

A)prices for products are lowered to the point at which revenue just covers costs.
B)a product is exported to a foreign country because demand for the product domestically has waned.
C)an abundance of inventory is sold off to discount retailers to recoup costs.
D)a company charges less for a product than what customers are willing to pay.
E)a company sells its exports to another country at a lower price than it sells the same product in its domestic market.

Question 72

Located on a college campus,Ben's Burger Barn charges $4.99 for its burger basket.However,students receive a 10% discount off the price for showing their student ID.This is an example of

A)price inflation.
B)price fixing.
C)deceptive pricing.
D)price discrimination.
E)predatory pricing.

Question 73

All of the following are legal under the Robinson-Patman Act except

A)charging different prices as a result of a going-out-of-business sale.
B)charging different prices if it is part of a quantity discount program.
C)promising to match competitor's prices if the consumer produces proof of the lower price.
D)charging a different price for a product that has changed in quality.
E)large companies leveraging their buying power to purchase goods at lower prices than smaller companies.

Question 74

The Robinson-Patman Act was passed in 1936 and

A)made the practice of price fixing illegal.
B)requires sellers to charge everyone the same price for a product.
C)established maximum rates for tariffs on imports and exports.
D)was designed to protect consumers from false advertising practices.
E)established the Federal Trade Commission.

Question 75

As noted in your text,producers in which country were accused of dumping by selling silk at unreasonably low prices?

A)China
B)Morocco
C)Brazil
D)India
E)Japan

Question 76

The practice of charging different customers different prices for the same product is called

A)price fixing.
B)price inflation.
C)deceptive pricing.
D)predatory pricing.
E)price discrimination.

Question 77

A retailer inflated the price of its leather jackets so that when it put the jackets on sale,it appeared to customers that they were getting a better deal than they really were.This is an example of what pricing strategy?

A)predatory pricing
B)price discrimination
C)deceptive pricing
D)price fixing
E)price inflation

Question 78

Deceptive pricing involves

A)adding hidden taxes to products that are imported or exported.
B)two or more companies colluding to set a product's price.
C)selling exports to another country at an unreasonably low price.
D)charging different customers different prices for the same product.
E)intentionally misleading customers with price promotions.

Question 79

The objective of strategic pricing is _______.

Question 80

Which of the following is also called the Advertising Act?

A)the Anti-Price Discrimination Act
B)the Clayton Antitrust Act
C)the Robinson-Patman Act
D)the Wheeler-Lea Act
E)the Federal Trade Commission Act