Question 1

Which of the following is true about the demand curve?

Accepted Answer

A)  A demand curve indicates the drop in the average per-unit production cost that comes with accumulated production experience. 
B)  A demand curve indicates the cost per unit of output in the long run. 
C)  A demand curve indicates the cost per unit of output in the short run. 
D)  In a monopoly, the demand curve does not indicate the total market demand resulting from different prices. 
E)  A demand curve shows the number of units the market will buy in a given time period at different prices that might be charged.

Question 2

Mansfield Pharmaceuticals markets Zipro, an antibiotic. The firm has fixed costs of $1,000,000 and variable costs of $2 per bottle of 50 tablets priced at $10 per bottle. What is the break-even volume?

Accepted Answer

A)  25,000 
B)  55,000 
C)  100,000 
D)  115,000 
E)  125,000

Question 3

________ pricing involves charging higher prices on an everyday basis but running frequent promotions to lower prices temporarily on selected items.

Accepted Answer

A)  High-low 
B)  Everyday low 
C)  Cost-plus 
D)  Break-even 
E)  Penetration

Question 4

If a company faces competition, its demand at different prices will depend on whether competitors' prices stay constant or change with the company's own prices.

Accepted Answer

A) True 
 B)False

Question 5

Overhead costs ________ as the number of units produced increases.

Accepted Answer

A)  decrease 
B)  increase steadily 
C)  fluctuate 
D)  remain the same 
E)  increase rapidly

Question 6

Retailers such as Costco and Walmart charge a constant, daily low price with few or no temporary price discounts. This is an example of ________ pricing.

Accepted Answer

A)  competition-based 
B)  everyday low 
C)  cost-plus 
D)  break-even 
E)  penetration

Question 7

The more elastic the demand, the more it pays for the seller to raise the price.

Accepted Answer

A) True 
 B)False

Question 8

As production workers become better organized and more familiar with equipment, the average cost per unit tends to decrease with the ________.

Accepted Answer

A)  increase in the diseconomies of scale 
B)  accumulated production experience 
C)  decrease in the economies of scale 
D)  increase in derived demand 
E)  increase in primary demand

Question 9

A downward-sloping experience curve is indicative of ________.

Accepted Answer

A)  the negative customer perception about a company's products 
B)  the falling demand for a company's products 
C)  the falling unit production cost of a company 
D)  the low quality of a company's products 
E)  slow and inadequate organizational learning

Question 10

In industrial markets, ________ typically has the final say in setting the pricing objectives and policies of a company.

Accepted Answer

A)  the sales manager 
B)  top management 
C)  the production manager 
D)  the HR department 
E)  the sales staff

Question 11

The simplest pricing method is ________ pricing.

Accepted Answer

A)  value-based 
B)  fixed cost 
C)  cost-plus 
D)  target return 
E)  competition-based

Question 12

Effective ________ pricing involves understanding how much value consumers place on the benefits they receive from the product and setting a price that captures that value.

Accepted Answer

A)  competition-oriented 
B)  cost-based 
C)  time-based 
D)  customer-oriented 
E)  marketer-oriented

Question 13

Elmo Inc., a global conglomerate, designed the ElBrush, an electric toothbrush. Sensing market demand for the electric toothbrush, Elmo started with an ideal selling price of $3 based on customer value considerations and then targeted costs to ensure that the price was met. This exemplifies ________.

Accepted Answer

A)  competition-based pricing 
B)  cost-plus pricing 
C)  target costing 
D)  everyday low pricing 
E)  high-low pricing

Question 14

Explain the significance of a downward-sloping experience curve.

Accepted Answer

The answer of Explain the significance of a downward-sloping experience...

Question 15

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

Accepted Answer

A)  It is used to determine how much production experience a company must have in order to achieve desired efficiencies. 
B)  It is a technique used to calculate fixed costs. 
C)  It determines the amount of retained earnings a company will have during a given accounting period. 
D)  It is a technique marketers use to determine the relationship between supply and demand. 
E)  It is calculated by using variable costs, the unit price, and fixed costs.

Question 16

If demand is elastic rather than inelastic, sellers will consider lowering their prices.

Accepted Answer

A) True 
 B)False

Question 17

A cell phone manufacturing firm produced 1,000 cell phones a day but believed that it could reasonably step up production to 2,000 cell phones a day. Consequently, it built a larger plant and installed efficient machinery and work arrangements to realize the projected output. Which of the following can most likely be inferred from this information?

Accepted Answer

A)  The unit cost of producing 2,000 cell phones per day would be twice that of the unit cost of producing 1,000 units per day. 
B)  A production plant with the capacity of producing 5,000 cell phones a day would be most efficient. 
C)  The unit cost of producing 2,000 cell phones per day would be lower than the unit cost of producing 1,000 units per day. 
D)  A 2,000-capacity production plant would be less efficient because of increasing diseconomies of scale. 
E)  The fixed costs of the firm are more likely to increase with the increase in output.

Question 18

Cost-based pricing involves setting prices based on consumer perception of value.

Accepted Answer

A) True 
 B)False

Question 19

The fixed cost in manufacturing a single LED monitor is $40 and the variable cost is $12. If the company expects to manufacture 5,000 monitors, the total costs would be ________.

Accepted Answer

A)  $60,000 
B)  $200,000 
C)  $260,000 
D)  $420,000 
E)  $500,000

Question 20

Which of the following is true with regard to pure competition?

Accepted Answer

A)  Under pure competition, no single buyer or seller has much effect on the going market price. 
B)  In a purely competitive market, marketing research is of utmost importance. 
C)  In a purely competitive market, product development is the focus of most firms. 
D)  Under pure competition, the market consists of many buyers and sellers who trade over a range of prices rather than a single market price. 
E)  Under pure competition, the market consists of only a few large sellers.

Exam 10: Pricing: Understanding and Capturing Customer Value

Which of the following is true about the demand curve?

Mansfield Pharmaceuticals markets Zipro, an antibiotic. The firm has fixed costs of $1,000,000 and variable costs of $2 per bottle of 50 tablets priced at $10 per bottle. What is the break-even volume?

________ pricing involves charging higher prices on an everyday basis but running frequent promotions to lower prices temporarily on selected items.

If a company faces competition, its demand at different prices will depend on whether competitors' prices stay constant or change with the company's own prices.

Overhead costs ________ as the number of units produced increases.

Retailers such as Costco and Walmart charge a constant, daily low price with few or no temporary price discounts. This is an example of ________ pricing.

The more elastic the demand, the more it pays for the seller to raise the price.

As production workers become better organized and more familiar with equipment, the average cost per unit tends to decrease with the ________.

A downward-sloping experience curve is indicative of ________.

In industrial markets, ________ typically has the final say in setting the pricing objectives and policies of a company.

The simplest pricing method is ________ pricing.

Effective ________ pricing involves understanding how much value consumers place on the benefits they receive from the product and setting a price that captures that value.

Explain the significance of a downward-sloping experience curve.

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

If demand is elastic rather than inelastic, sellers will consider lowering their prices.

Cost-based pricing involves setting prices based on consumer perception of value.

The fixed cost in manufacturing a single LED monitor is $40 and the variable cost is $12. If the company expects to manufacture 5,000 monitors, the total costs would be ________.

Which of the following is true with regard to pure competition?