Question 1

In ________, the seller charges different amounts to different classes of buyers.

Accepted Answer

A)  perceived value pricing 
B)  third-degree price discrimination 
C)  first-degree price discrimination 
D)  second-degree price discrimination 
E)  psychological discounting

Question 2

When Yolanda went shopping, she paid a lot to buy a jacket that had a well-known designer's tag attached to it. After a few days, she came across a jacket which was undistinguishable from the one she had bought but was priced 5 times lesser than the earlier one. She didn't give this a second thought because she was convinced that the designer label she had bought was worth it. What can be deduced from this?

Accepted Answer

The answer of When Yolanda went shopping, she paid a...

Question 3

The minimum price that most consumers would pay for a given product is known as the ________ price.

Accepted Answer

A)  everyday low 
B)  usual discounted 
C)  fair 
D)  typical 
E)  lower-bound

Question 4

Psychological discounting involves setting an artificially high price and then offering the product at substantial savings.

Accepted Answer

A) True 
 B)False

Question 5

In high-low pricing, retailers charge low prices on an everyday basis with occasional price increases.

Accepted Answer

A) True 
 B)False

Question 6

A firm that is plagued with overcapacity, intense competition, or changing consumer desires would do better if it pursues ________ as its major objective.

Accepted Answer

A)  market skimming 
B)  product-quality leadership 
C)  survival 
D)  profit maximization 
E)  market penetration

Question 7

The prices of tickets to the opera vary depending on where the person would like to be seated - in the gallery or in the stalls. This is an example of ________ pricing.

Accepted Answer

A)  channel 
B)  time 
C)  image 
D)  product-form 
E)  location

Question 8

A British aircraft manufacturer sold planes to Brazil for 70 percent cash and the rest in coffee. This is an example of what kind of a countertrade?

Accepted Answer

The answer of A British aircraft manufacturer sold planes to...

Question 9

Value pricing requires a company to reengineer its operations to become a low-cost producer.

Accepted Answer

A) True 
 B)False

Question 10

If firms wish to maximize their market share, they should opt for market-skimming pricing.

Accepted Answer

A) True 
 B)False

Question 11

In markets that are characterized by products that are highly homogeneous, how should a firm react to a competitor's reduction in price?

Accepted Answer

A)  shrink the amount of the product available 
B)  substitute expensive materials or ingredients 
C)  reduce product features 
D)  reduce product services 
E)  augment the product

Question 12

When ConAgra foods decided to cut $250 million in costs to return to a $1 price point (after sales dropped as a result of raising prices $0.25 to cover higher commodity costs), it was using ________.

Accepted Answer

A)  target costing 
B)  experience-curve pricing 
C)  ceiling pricing 
D)  the learning curve 
E)  promotional price elasticities

Question 13

How can a firm anticipate a competitor's reactions to a price change?

Accepted Answer

The answer of How can a firm anticipate a competitor's...

Question 14

In ________, the seller charges a separate price to each customer depending on the intensity of his or her demand.

Accepted Answer

A)  second-degree price discrimination 
B)  third-degree price discrimination 
C)  psychological discounting 
D)  special-customer pricing 
E)  first-degree price discrimination

Question 15

While shopping at the mall, Jane was asked by one of the sales representatives at the cosmetics counter to try out a new lipstick that her company was test marketing. The company representative asks her how much she would be willing to pay for the lipstick. After trying it out, Jane is of the opinion that $5 is just the right price for it. What type of a reference price is Jane using?

Accepted Answer

A)  usual discounted price 
B)  fair price 
C)  maximum retail price 
D)  last price paid 
E)  historical competitor price

Question 16

Matt's retail store offers all products at $2 less than its competitors. The store never runs promotional campaigns or offers special discounts. Matt's retail store is following a(n) ________ pricing policy.

Accepted Answer

A)  auction-type 
B)  target-plus 
C)  everyday low 
D)  high-low 
E)  going-rate

Question 17

Madame Tussaud's wax museum is a popular tourist attraction in London. The museum charges higher entry rates for tourists compared to locals. This form of price discrimination is known as ________ pricing.

Accepted Answer

A)  customer-segment 
B)  image 
C)  location 
D)  special customer 
E)  special event

Question 18

When Abe goes shopping, he comes across a T-shirt that is priced at $35. Although he wants to buy it, judging from the material used, he feels that the T-shirt should only cost $20. What reference price is Abe using here?

Accepted Answer

The answer of When Abe goes shopping, he comes across...

Question 19

Which of the following is the most elementary pricing method?

Accepted Answer

A)  value pricing 
B)  going-rate pricing 
C)  markup pricing 
D)  target-return pricing 
E)  perceived-value pricing

Question 20

In first-degree price discrimination, the seller charges less to buyers who purchase in larger volumes.

Accepted Answer

A) True 
 B)False

Exam 16: Developing Pricing Strategies and Programs

In ________, the seller charges different amounts to different classes of buyers.

The minimum price that most consumers would pay for a given product is known as the ________ price.

Psychological discounting involves setting an artificially high price and then offering the product at substantial savings.

In high-low pricing, retailers charge low prices on an everyday basis with occasional price increases.

A firm that is plagued with overcapacity, intense competition, or changing consumer desires would do better if it pursues ________ as its major objective.

The prices of tickets to the opera vary depending on where the person would like to be seated - in the gallery or in the stalls. This is an example of ________ pricing.

A British aircraft manufacturer sold planes to Brazil for 70 percent cash and the rest in coffee. This is an example of what kind of a countertrade?

Value pricing requires a company to reengineer its operations to become a low-cost producer.

If firms wish to maximize their market share, they should opt for market-skimming pricing.

In markets that are characterized by products that are highly homogeneous, how should a firm react to a competitor's reduction in price?

When ConAgra foods decided to cut $250 million in costs to return to a $1 price point (after sales dropped as a result of raising prices $0.25 to cover higher commodity costs) , it was using ________.

How can a firm anticipate a competitor's reactions to a price change?

In ________, the seller charges a separate price to each customer depending on the intensity of his or her demand.

Matt's retail store offers all products at $2 less than its competitors. The store never runs promotional campaigns or offers special discounts. Matt's retail store is following a(n) ________ pricing policy.

Madame Tussaud's wax museum is a popular tourist attraction in London. The museum charges higher entry rates for tourists compared to locals. This form of price discrimination is known as ________ pricing.

When Abe goes shopping, he comes across a T-shirt that is priced at $35. Although he wants to buy it, judging from the material used, he feels that the T-shirt should only cost $20. What reference price is Abe using here?

Which of the following is the most elementary pricing method?

In first-degree price discrimination, the seller charges less to buyers who purchase in larger volumes.