Deck 17: Pricing and Distributing Goods and Services

Question 1

Sally is selling bracelets for $16.00 and the markup is $6.40.What is the markup percentage?

A) 40%
B) 12.5%
C) 19.6%
D) 36.4%
E) 54%

Answer 1

A
40%

Question 2

Assume that the cost of one unit of product is $12 and the store sells the product for $22.What is the markup percentage?

A) 32 percent
B) 41 percent
C) 45 percent
D) 21 percent
E) 66 percent

Answer 2

C
45 percent

Question 3

If total fixed costs are $100 000,the price for which the product sells is $15.00,and variable cost per unit is $8.00,what is the break-even point in units?

A) 20 275 units
B) 16 274 units
C) 14 286 units
D) 18 283 units
E) 12 356 units

Answer 3

C
14 286 units

Question 4

How would the manager of Silks Courtyard Cafe calculate markup percentage?

A) The markup is divided by the sales volume.
B) The markup is divided by sales price.
C) The total costs are divided by total fixed costs.
D) The sales price is divided by profit.
E) The fixed costs are divided by variable costs.

Question 5

Sara Jane is selling posters at the sale price of $12.00,and the markup percent is 35%.What is the dollar amount of the markup?

A) $7.80
B) $4.20
C) $7.75
D) $3.50
E) none of these

Question 6

In the U.K.,one insurer has introduced a system where car insurance premiums vary depending on how much,where,and when a person drives.This system is designed to

A) maximize profits.
B) help the company survive in a competitive marketplace.
C) improve the company's image.
D) attain a desired market share.
E) protect trademarks.

Question 7

A product's cost plus ________ results in the sales price.

A) margin
B) variable price
C) fixed price
D) markup
E) break-even price

Question 8

What are the two main pricing objectives that are observable in corporate pricing?

A) Market share and company image
B) Advertising and sales promotion
C) Company survival in a competitive marketplace and profit maximization
D) Market share and profit maximization
E) Advertising and profit maximization

Question 9

What is "markup"?

A) Markup is the point at which the firm covers the fixed and variable costs.
B) Markup is the amount of money left over after all expenses have been deducted from revenues.
C) Markup is an amount equal to demand divided by product cost.
D) Markup is an amount added to the cost of the item to arrive at the selling price.
E) Markup is the point where demand equals supply.

Question 10

Costs that change with the quantity of a product that is produced or sold are

A) on-going costs.
B) variable costs.
C) fixed costs.
D) product costs.
E) selling costs.

Question 11

A video store owner would begin to price DVDs by taking into consideration all of the following costs except

A) market share objectives.
B) utilities and insurance.
C) store rent and staff salaries.
D) product displays.
E) cost of buying DVDs from the manufacturer.

Question 12

Assume that the cost of one unit of product is $8 and the store sells the product for $15.What is the markup percentage?

A) 46.7 percent
B) 41.3 percent
C) 150.3 percent
D) 214.5 percent
E) 66.3 percent

Question 13

A 10 kg.bag of soil costs Greencorp $6.If management prices the bag at $15,the markup percentage is

A) 40%.
B) 10%.
C) 34%.
D) 60%.
E) 25%.

Question 14

Costs that are unaffected by the quantity of a product that is produced or sold are

A) variable costs.
B) on-going costs.
C) selling costs.
D) fixed costs.
E) product costs.

Question 15

What are the two basic tools used in price-setting?

A) Profit maximization and market share
B) Advertising and sales promotion
C) Cost-oriented pricing and break-even analysis
D) Cost-oriented pricing and profit maximization
E) Cost-oriented pricing and market share

Question 16

What information is provided to the manager by performing a break-even analysis?

A) The break-even point identifies the total costs.
B) The break-even point identifies the point where variable costs equal fixed costs.
C) Sales volume above the break-even point makes a profit for the firm.
D) The break-even point identifies the amount of markup.
E) The break-even point identifies the intersection of the demand and supply curves.

Question 17

Which of the following is not a consideration when pricing products?

A) Protecting trademarks
B) Company image
C) Attaining a desired market share
D) Surviving in competitive marketplaces
E) Maximizing profits

Question 18

What is the purpose of using break-even analysis when attempting to set prices?

A) To determine the total costs of the product
B) To show the cost,volume,and profit relationships
C) To compare demand and supply
D) To reflect the markup needed to make a profit
E) To show the costs which must be considered in setting prices

Question 19

Companies often price their products to establish ________,a company's percentage of the total market sales for a specific product type.

A) break-even point
B) sales percentage
C) variable costs
D) fixed costs
E) market share

Question 20

The amount added to a product's cost to meet profit targets is usually expressed as a percentage of

A) selling price.
B) selling costs.
C) component costs.
D) total costs.
E) wholesale price.

Question 21

Which of the following is correct with regard to the pricing of existing and new products?

A) Price skimming is generally most effective for consumer goods,but penetration pricing is generally most effective for industrial goods.
B) The penetration pricing option is generally most effective for both consumer and industrial goods.
C) In the car rental business,setting prices below the market generally works best.
D) Penetration pricing is generally superior to a skimming strategy for new products.
E) None of these.

Question 22

Which of the following is not an anticipated result when Trimar Videos uses the price-skimming strategy?

A) The high price will keep away potential competitors.
B) High profits will attract competitors.
C) High profits permit the firm to cover product development costs.
D) It convinces consumers that a product is truly different from those already on the market.
E) It may allow high profits initially.

Question 23

"We can offer you a quality men's suit for under $200," the salesman says.The actual price is $199.99.This is an example of

A) salesmens' jabber.
B) price choking.
C) odd-even pricing.
D) price detailing.
E) price lining.

Question 24

What results can be expected if Trimar Videos uses a price-skimming strategy to price its video equipment?

A) It may allow the firm to earn a large profit on each unit of sales of the product.
B) It will generate a lot of trial purchases of the product.
C) It will generate a lot of consumer interest.
D) It permits the firm to gain entrance to a market and then later adjust the price to a more realistic figure.
E) It will result in price-fixing charges by the government.

Question 25

What pricing strategy has generally been used for HDTV?

A) Penetration pricing
B) Price lining
C) Market pricing
D) Price fixing
E) Price skimming

Question 26

By stocking a new,highly visible line of shampoos priced lower than local stores,Jack is trying to increase

A) the quality of hair of the youth in the area.
B) the break-even point.
C) yield management.
D) fixed costs so that the variable costs would decrease.
E) his market share of the hair product market.

Question 27

What is the formula for determining the break-even point?

A) Total variable costs divided by (price minus variable costs)
B) Total variable costs divided by (price minus fixed costs)
C) Total fixed costs divided by (price minus variable costs)
D) Total fixed costs divided by (price minus fixed costs)
E) Total revenue divided by (price minus fixed costs)

Question 28

Which of the following is most likely to be used to establish a new product in a market that already has similar products?

A) Penetration pricing
B) Market pricing
C) Price skimming
D) Price fixing
E) Price lining

Question 29

Odd-even pricing involves

A) setting a limited number of prices for certain categories of products.
B) setting an initial high price to cover new product costs and generating a profit.
C) taking advantage of the fact that consumers do not always respond rationally to stated prices.
D) setting prices in uneven dollar amounts.
E) setting an initial low price to establish a new product in the market.

Question 30

If Trix,a new electronics company,begins producing TVs and prices them as high as possible,then Trix is using

A) a penetration-pricing strategy.
B) price leadership.
C) a price-skimming strategy.
D) price fixing.
E) price lining.

Question 31

Pricing above the market plays on the common assumption that

A) consumers are so uninformed that they won't know the difference.
B) although consumers will not admit it,they like to pay higher prices.
C) a desperate business in danger of failing must get the most for each item it sells.
D) higher prices are much more popular now.
E) higher price means higher quality.

Question 32

Companies selling products like structural steel,gasoline,and processed foods typically use which of the following pricing strategies?

A) Price lining
B) Prices above prevailing prices
C) Price fixing
D) Price leadership
E) Prices below prevailing prices

Question 33

Which of the following is correct with regard to break-even analysis?

A) Variable costs are really all that is important.
B) Fixed costs are all that really is important.
C) Some costs are unaffected by the number of units of product that are sold.
D) Generally speaking,retailers should charge higher prices so that they will reach the break-even point earlier.
E) Break-even analysis fails to take into account the slope of the demand curve.

Question 34

Psychological pricing involves

A) setting an initial low price to establish a new product in the market.
B) setting prices in uneven dollar amounts.
C) setting a limited number of prices for certain categories of products.
D) setting an initial high price to cover new product costs and generating a profit.
E) taking advantage of the fact that consumers do not always respond rationally to stated prices.

Question 35

Many etailers,such as eBay and Priceline,use ________ pricing.

A) penetration
B) skimming
C) dynamic
D) psychological
E) odd-even

Question 36

Shiras Watch Depot prices all watches at $150.The variable cost per watch is $70 and the fixed costs are $55 000.What is Shiras' break-even point in units?

A) 687.50
B) 806.25
C) 702.00
D) 300.00
E) 453.75

Question 37

Pricing below prevailing market price can succeed for a firm if

A) the firm has effective promotional tactics and gimmicks.
B) the firm can effectively criticize its competitors' products.
C) the firm can offer a product of acceptable quality.
D) the public doesn't learn that the firm's product is indeed inferior.
E) none of these.

Question 38

Nell's Nurseries offers lower prices for large quantity purchases.This is an example of

A) price lining.
B) price fixing.
C) market pricing.
D) price discounting.
E) psychological pricing.

Question 39

A bakery specializes in making cherry tarts.The bakery workers are paid by the number of tarts that they make and sell.Which of the following costs at the bakery are not variable?

A) Cherries
B) Sugar
C) Flour
D) Rental fee on the bakery's building
E) They are all variable

Question 40

What results can be expected if Trimar Videos used a price-skimming strategy to price its video equipment?

A) Large profits may be earned on each sale.
B) It may generate a lot of consumer interest,but very low profits.
C) It permits the store to gain entrance to a market and then later adjust the price to a more realistic figure.
D) It generates a lot of consumer interest.
E) It will increase Trimar's market share.

Question 41

Channel number one of the consumer products distribution network has the following participants:

A) manufacturer - agent - consumer
B) manufacturer - industrial user
C) manufacturer - consumer
D) manufacturer - retailer - consumer
E) manufacturer - wholesaler - retailer - consumer

Question 42

"Sears Good," "Sears Better," and "Sears Best" are examples of

A) market pricing.
B) price fixing.
C) psychological pricing.
D) price lining.
E) price discounting.

Question 43

Julia,owner of Julia's Craft Supply Store,would like to take advantage of the fact that customers are not completely rational when making buying decisions and may prefer prices that are not stated in even dollar amounts.Which pricing tactic is she interested in?

A) Discounting
B) Price skimming
C) Psychological pricing
D) Skewed pricing
E) Price lining

Question 44

A retailer is

A) an individual or firm that helps to distribute a product.
B) an intermediary who sells products to other businesses for resale to final consumers.
C) an intermediary who sells products directly to consumers.
D) a network of independent companies through which a product passes from producer to end-user.
E) the combination of distribution channels by which a firm gets its products to end-users.

Question 45

A(n)________ is the path that a product follows from producer to end user.

A) distribution mix
B) intermediary channel
C) distribution channel
D) flow of goods network
E) intermediary flow chart

Question 46

A wholesaler is

A) the combination of distribution channels by which a firm gets its products to end-users.
B) an intermediary who sells products to other businesses for resale to final consumers.
C) an individual or firm that helps to distribute a product.
D) a network of independent companies through which a product passes from producer to end-user.
E) an intermediary who sells products directly to consumers.

Question 47

An intermediary is

A) the combination of distribution channels by which a firm gets its products to end-users.
B) a business that sells products to other businesses for resale to final consumers.
C) a business that sells products directly to consumers.
D) an individual or firm that helps to distribute a product.
E) a network of independent companies through which a product passes from producer to end-user.

Question 48

The most complex consumer goods distribution network is found in channel number four and is the direct result of

A) the addition of industrial goods into the distribution network.
B) adding two or more wholesalers to the distribution network.
C) the higher costs of retail space.
D) the increasing number of small owner-operated trucking firms.
E) adding more manufacturers to the distribution network.

Question 49

Goodyear and Levi's have their own retail outlets.This is an example of which distribution channel?

A) Direct distribution
B) Retail distribution
C) Wholesale distribution
D) Distribution by agents
E) Distribution by brokers

Question 50

If Louisa's Craft Supply Store uses odd-even psychological pricing,then it would likely price its yarn at

A) $4.50 per ball.
B) $4 per ball.
C) $5 per ball.
D) $4.95 per ball.
E) $6 per ball.

Question 51

ElectroMax,a manufacturer of high-end cell phones,is planning to enter the Indian market.A senior manager thinks that a stripped-down,low-priced model should be the starting point,and the company can sell additional features added to the base model at higher price points.If the following facts were known,which one would weaken the manager's argument?

A) If ElectroMax produces a stripped-down model,Canadian users will change their views of the company's brand.
B) It is well-known that a high-end auto manufacturer who came out with an economy model experienced problems in the Indian market.
C) India recently blocked low-priced Chinese phones that had quality problems.
D) The market for high-end cell phones in India is saturated.
E) A lot of high-end customers do not use most of the advanced features of ElectroMax's phone.

Question 52

Searchmont Ski Resort was finding that the spring season was a particularly slow time for chalet rentals.In order to increase the occupancy rate,Searchmont should implement a

A) quantity discount.
B) seasonal discount.
C) skimming discount.
D) cash discount.
E) trade discount.

Question 53

The combination of distribution channels that a firm selects to get a product to its end users is its

A) distribution mix.
B) distribution strategy.
C) distribution network.
D) channel selection.
E) channel intermediaries.

Question 54

A(n)________ sells products to a(n)________ who sells them to consumers.

A) retailer; wholesaler
B) wholesaler; intermediary
C) intermediary; wholesaler
D) intermediary; retailer
E) wholesaler; retailer

Question 55

Which of the following is correct with regard to the four basic consumer channels of distribution?

A) The direct channel relies on agents and brokers.
B) Wholesalers entered the distribution network to take over more of the storage function when the cost of retail store space increased.
C) There are no retail outlets required if a company uses retail distribution.
D) Sales agents generally do not form long-term relationships with suppliers of the goods they sell.
E) Vancouver-based Uniglobe Travel is an example of retail distribution.

Question 56

ElectroMax,a manufacturer of high-end cell phones,is planning to enter the Indian market.A senior manager thinks that a stripped-down,low-priced model should be the starting point,and the company can sell additional features added to the base model at higher price points.Analysis reveals that if ElectroMax offers Indian customers products at a number of different price points,the company would initially earn more profit,but it would also run the risk of damaging the brand in the long term.Which of the following would weaken the argument that ElectroMax should offer products at multiple price points?

A) The Indian market is big enough to support product offerings at multiple price points.
B) Taiwanese manufacturers have recently focused on the low to medium end when selling in their domestic markets.
C) Brand image is based on all the perceptions that customers have of a company's product.
D) The typical Canadian consumer associates price with quality.
E) Niche companies that try to be everything to everyone usually lose their edge in their core business.

Question 57

Boland's Suits sells all suits in just a few price categories.This is an example of __________.

A) price skimming
B) boundary pricing
C) discounting
D) penetration pricing
E) price lining

Question 58

When is discounting used to set prices?

A) When attempting to stimulate sales
B) When odd-even psychological pricing is not successful
C) When conducting a break-even analysis
D) When a price-skimming strategy is used
E) When profit margins are too low

Question 59

ElectroMax,a manufacturer of high-end cell phones,is planning to enter the Indian market.A senior manager thinks that a stripped-down,low-priced model should be the starting point,and the company can sell additional features added to the base model at higher price points.Analysis reveals that if ElectroMax offers Indian customers products at a number of different price points,the company would initially earn more profit but would run the risk of damaging the brand in the long term.Which of the following would support the argument that ElectroMax should offer products at multiple price points?

A) One of the company's core values is to offer only the most advanced technology in the products it sells.
B) Shareholders of ElectroMax are motivated mainly by short-term profits.
C) ElectroMax's competitors have adapted their products for sale in the Indian market.
D) Indian customers are becoming increasingly selective about the brands they are willing to purchase.
E) The Indian middle class is rapidly reaching a level where they can afford premium products.

Question 60

ElectroMax,a manufacturer of high-end cell phones,is planning to enter the Indian market.A senior manager thinks that a stripped-down,low-priced model should be the starting point,and the company can sell additional features added to the base model at higher price points.If the following facts were known,which one would MOST strengthen the manager's argument?

A) Consumers are looking for a lot of variety in this product category.
B) Most of India's consumer market has little disposable income.
C) Only a few competitors offer basic cell phones because consumers are getting more sophisticated.
D) ElectroMax will likely face charges of "dumping" if it sells its phones at prices lower than what it offers in the home country.
E) Many different companies already address the requirements of the different market segments in India.

Question 61

A company like Black & Decker has product lines that do not require intense market exposure to increase sales.Which distribution strategy is it likely to use?

A) Intensive distribution
B) Industrial distribution
C) Discriminatory distribution
D) Exclusive distribution
E) Selective distribution

Question 62

Which channel is most likely to be used for steel,Dell Computers,or packaging containers?

A) Producer to retailer to industrial user
B) Producer to wholesaler to industrial user
C) Producer to agent to wholesaler to retailer to industrial user
D) Producer to industrial user
E) Producer to agent to retailer to industrial user

Question 63

Jim Bradley represents several producers and is paid a commission based on invoice values.Which of the following types of intermediary is Jim?

A) Wholesaler
B) Sales office
C) Sales branch
D) Agent/broker
E) Rack jobber

Question 64

Which channel is most likely to be used for accessory equipment (computer terminals,office equipment)and supplies (diskettes,copier paper)?

A) Producer to agent to wholesaler to retailer to industrial user
B) Producer to agent to retailer to industrial user
C) Producer to wholesaler to industrial user
D) Producer to industrial user
E) Producer to retailer to industrial user

Question 65

What explains the expanding use of wholesalers?

A) Delivery time between the producer and the consumer is faster than it used to be.
B) Wholesalers have a bigger distribution network.
C) The cost of retail space has risen,thereby creating pressure to limit storage space in retail outlets.
D) The development of a good truck distribution system and highway system permitted quicker delivery of ordered goods.
E) The order-cycle time has declined.

Question 66

The real estate industry relies on which channel of distribution?

A) Direct distribution
B) Retail distribution
C) Wholesale distribution
D) Distribution by agents/brokers
E) Distribution by vendors

Question 67

Caramilk bars are an example of _____________ distribution,whereas Jaguar cars are an example of ______________ distribution.

A) exclusive; selective
B) selective; exclusive
C) intensive; selective
D) selective; selective
E) intensive; exclusive

Question 68

Avon,Dell,and Tupperware use the __________ channel of distribution.

A) direct
B) retail
C) wholesale
D) agent
E) broker

Question 69

The owner of Fiama Electric overheard the manager of a competing firm discussing his new exclusive distribution strategy.You explain to him that this strategy entails

A) distributing the product through as many warehouses and retailers as possible,thereby excluding no one.
B) distributing through the use of a limited number of outlets for a product.
C) giving only one trucking firm the exclusive transportation contract to deliver the products.
D) a firm selecting only those wholesalers and retailers who will give exclusive attention to its product.
E) the manufacturer granting the right to distribute and sell the product to only one wholesaler or retailer in an area.

Question 70

Fiama Electric,a new home appliance producer,wants to get the largest market exposure possible.Which distribution strategy should Fiama use?

A) Wholesalers
B) Distribution by trucks that can reach almost any point in Canada
C) Distribution by air
D) Intensive distribution
E) Selective distribution

Question 71

When Vancouver-based Uniglobe Travel International books flight reservations,it is an illustration of which channel of distribution?

A) Direct distribution
B) Retail distribution
C) Wholesale distribution
D) Distribution by agents/brokers
E) None of these

Question 72

Which of the following is not a function of a merchant wholesaler?

A) Storage
B) Delivery
C) Buying
D) Credit extension
E) Manufacturing

Question 73

The most widely used channel for industrial goods is

A) producer to wholesaler to industrial user.
B) producer to industrial user.
C) producer to agent to retailer to industrial user.
D) producer to retailer to industrial user.
E) producer to agent to wholesaler to retailer to industrial user.

Question 74

Which of the following intermediaries usually receive commissions based on the prices of the goods they sell?

A) Produce markets
B) Wholesalers
C) Retailers
D) Agents
E) All of these

Question 75

Which term describes a vertical marketing system (VMS)where all stages in the channel are under single ownership?

A) Administered VMS
B) Contractual VMS
C) Consolidated VMS
D) Proprietary VMS
E) Corporate VMS

Question 76

Why is Walmart an example of retail distribution?

A) Because it is so important on the Canadian retail scene
B) Because it buys products directly from manufacturers
C) Because it employs more retail employees than any other firm
D) Because it uses sales agents only for its sporting goods department
E) Because many industrial buyers shop there

Question 77

Which of the following is correct with regard to non-direct distribution?

A) Non-direct distribution usually means lower prices.
B) The value added by intermediaries is generally exceeded by the costs of the services they provide.
C) Eliminating intermediaries eliminates the tasks they perform and the costs they incur.
D) Intermediaries provide an essential service,but it may not be a low-cost service.
E) There is no need for intermediaries in business activities like those on eBay.

Question 78

The Limited is part of a(n)____________,while IGA is part of a(n)____________.

A) corporate vertical marketing system; contractual vertical marketing system
B) intensive distribution system; exclusive distribution system
C) administrative vertical marketing system; corporate vertical marketing system
D) exclusive distribution system; selective distribution system
E) contractual vertical marketing system; corporate vertical marketing system

Question 79

In a(n)____________,all stages in the channel are under single ownership,while in a(n)___________,channel members sign contracts agreeing to specific duties and rewards.

A) contractual vertical marketing system; corporate vertical marketing system
B) intensive distribution system; exclusive distribution system
C) administrative vertical marketing system; corporate vertical marketing system
D) exclusive distribution system; selective distribution system
E) corporate vertical marketing system; contractual vertical marketing system

Question 80

Warriners is a family-owned grocery store that sells approximately 12 cases of canned potatoes per year.It orders one case a month from a local wholesaler.This is an example of a

A) channel 4 distribution system.
B) channel 3 distribution system.
C) channel 2 distribution system.
D) channel 5 distribution system.
E) channel 1 distribution system.