Question 1

Los Amigos, a new Mexican restaurant, has set up shop across the street from Hot Tamales and More. Which of the following pricing strategies will Los Amigos likely use?

Accepted Answer

A)   cost-plus
B)   competition-based
C)   break-even
D)   good-value
E)   target costing B

Question 2

Which of the following pricing strategies is the opposite of FOB-origin pricing?

Accepted Answer

A)   basing-point pricing
B)   dynamic pricing
C)   uniform-delivered pricing
D)   freight-absorption pricing
E)   zone pricing C

Question 3

NerdHerd Electronics sells three different sizes of televisions at three different prices. In this case, the company's pricing strategy is referred to as ________ pricing.

Accepted Answer

A)   product line
B)   optional-product
C)   by-product
D)   product bundle
E)   captive-product A

Question 4

________ pricing refers to selling below cost with the intention of punishing a competitor or gaining higher long-run profits by putting competitors out of business.

Accepted Answer

A)   Oligopolistic
B)   Captive
C)   Dynamic
D)   Zone
E)   Predatory

Question 5

How do firms that use captive-product pricing make up for the low prices of their main products?

Accepted Answer

A)   They reduce the cost of the captive products.
B)   They provide the captive products as freebies.
C)   They set high markups on the captive products.
D)   They increase the price of the main products.
E)   They offer the captive products and main products together at a reasonable price.

Question 6

Busch Stadium in St. Louis charges different prices for seats in different areas of the ball park, even though each seat costs the same for the owners of the stadium. What is this form of pricing called?

Accepted Answer

A)   location-based pricing
B)   market-skimming pricing
C)   product-form pricing
D)   time-based pricing
E)   market-penetration pricing

Question 7

With reference to pricing in different types of markets, compare oligopolistic competition with a pure monopoly.

Accepted Answer

The answer of With reference to pricing in different types...

Question 8

What is customer value-based pricing? Describe the two types of value-based pricing.

Accepted Answer

The answer of What is customer value-based pricing? Describe the...

Question 9

Vac "N" Sew, a consumer electronics outlet, offers a price reduction of $100 when customers bring in a used vacuum cleaner and exchange it for a new vacuum cleaner or sewing machine. This is an example of a ________.

Accepted Answer

A)   functional discount
B)   cash discount
C)   seasonal discount
D)   trade-in allowance
E)   by-product allowance

Question 10

Dynamic pricing is particularly suitable for Internet-based companies like Amazon who want to be responsive to shoppers' desires and marketplace changes.

Accepted Answer

A) True 
 B)False

Question 11

________ uses buyers' perceptions of what a product is worth as the key to pricing.

Accepted Answer

A)   Customer value-based pricing
B)   Target return pricing
C)   Cost-plus pricing
D)   Psychological pricing
E)   Competition-based pricing

Question 12

Value-based pricing is often product driven, and customer value perceptions are secondary.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following pricing strategies charges the same price plus freight to all customers, regardless of their location?

Accepted Answer

A)   basing-point pricing
B)   freight-absorption pricing
C)   FOB-origin pricing
D)   zone pricing
E)   uniform-delivered pricing

Question 14

A break-even chart shows the total cost and total revenue expected at various sales volume levels of a product.

Accepted Answer

A) True 
 B)False

Question 15

Target costing starts with an ideal selling price based on customer value considerations and then aims at costs that will ensure that the price is met.

Accepted Answer

A) True 
 B)False

Question 16

When demand hardly changes with a small change in the price of a product, the demand for the product is best described as ________.

Accepted Answer

A)   elastic
B)   flexible
C)   inelastic
D)   variable
E)   cyclical

Question 17

Providing extra amenities to differentiate and support high-priced products is referred to as ________ pricing.

Accepted Answer

A)   high-low
B)   value-added
C)   target return
D)   everyday low
E)   cost-plus

Question 18

Under oligopolistic competition, the market consists of only a few large sellers.

Accepted Answer

A) True 
 B)False

Question 19

The relationship between the price charged for a product and the resulting demand level can be shown in a(n)________.

Accepted Answer

A)   demand curve
B)   supply curve
C)   elastic demand slope
D)   break-even chart
E)   inelastic demand slope

Question 20

Overuse of promotional pricing can erode a brand's value in the eyes of customers.

Accepted Answer

A) True 
 B)False

Exam 9: Pricing: Understanding and Capturing Customer Value

Los Amigos, a new Mexican restaurant, has set up shop across the street from Hot Tamales and More. Which of the following pricing strategies will Los Amigos likely use?

Which of the following pricing strategies is the opposite of FOB-origin pricing?

NerdHerd Electronics sells three different sizes of televisions at three different prices. In this case, the company's pricing strategy is referred to as ________ pricing.

________ pricing refers to selling below cost with the intention of punishing a competitor or gaining higher long-run profits by putting competitors out of business.

How do firms that use captive-product pricing make up for the low prices of their main products?

Busch Stadium in St. Louis charges different prices for seats in different areas of the ball park, even though each seat costs the same for the owners of the stadium. What is this form of pricing called?

With reference to pricing in different types of markets, compare oligopolistic competition with a pure monopoly.

What is customer value-based pricing? Describe the two types of value-based pricing.

Vac "N" Sew, a consumer electronics outlet, offers a price reduction of $100 when customers bring in a used vacuum cleaner and exchange it for a new vacuum cleaner or sewing machine. This is an example of a ________.

Dynamic pricing is particularly suitable for Internet-based companies like Amazon who want to be responsive to shoppers' desires and marketplace changes.

________ uses buyers' perceptions of what a product is worth as the key to pricing.

Value-based pricing is often product driven, and customer value perceptions are secondary.

Which of the following pricing strategies charges the same price plus freight to all customers, regardless of their location?

A break-even chart shows the total cost and total revenue expected at various sales volume levels of a product.

Target costing starts with an ideal selling price based on customer value considerations and then aims at costs that will ensure that the price is met.

When demand hardly changes with a small change in the price of a product, the demand for the product is best described as ________.

Providing extra amenities to differentiate and support high-priced products is referred to as ________ pricing.

Under oligopolistic competition, the market consists of only a few large sellers.

The relationship between the price charged for a product and the resulting demand level can be shown in a(n) ________.

Overuse of promotional pricing can erode a brand's value in the eyes of customers.