Question 1

Price elasticity of demand is expressed as

Accepted Answer

A)  E = Percentage change in price ÷ Percentage change in quantity demanded. 
B)  E = Price ÷ Quantity demanded. 
C)  E = Percentage change in quantity demanded ÷ Percentage change in price. 
D)  E = Quantity demanded ÷ Price. 
E)  E = Quantity demanded × Price.

Question 2

Rent, executive salaries, and insurance are typical examples of

Accepted Answer

A)  variable costs. 
B)  fixed costs. 
C)  unit costs. 
D)  marginal costs. 
E)  total costs.

Question 3

Figure 13-4A
-Figure 13-4A above shows that when the price for Red Baron frozen cheese pizzas moves from $8 to $6 per unit along the demand curve D1, the profit

Accepted Answer

A)  increases from 6 to 8 million units per year. 
B)  decreases from 8 to 6 million units per year. 
C)  stays the same. 
D)  increases from $2 to $3 per unit. 
E)  cannot be determined; demand curves do not show a relationship to profit.

Question 4

What is the difference between a movement along a demand curve and a shift of a demand curve?

Accepted Answer

The answer of What is the difference between a movement...

Question 5

The total expense incurred by a firm in producing and marketing a product, which equals the sum of fixed cost and variable cost, is referred to as

Accepted Answer

A)  overhead cost. 
B)  total cost. 
C)  unit cost. 
D)  average cost. 
E)  marginal cost.

Question 6

Dozens of regional, private brands of peanut butter compete with national brands like Skippy and Jif. This industry is an example of

Accepted Answer

A)  pure monopoly. 
B)  oligopoly. 
C)  monopolistic competition. 
D)  bilateral monopoly. 
E)  monopolistic oligopoly.

Question 7

The quantity at which total revenue and total cost are equal is referred to as

Accepted Answer

A)  the tipping point. 
B)  the profitability point. 
C)  incremental return on investment. 
D)  the break-even point. 
E)  sustainability.

Question 8

Factors other than price affect demand. What are they and how do they work?

Accepted Answer

The answer of Factors other than price affect demand. What...

Question 9

The executive vice president of Washburn Guitars has set a sales target of 2,000 units for a new line of guitars. This type of objective is a ________ pricing objective.

Accepted Answer

A)  profit 
B)  target return 
C)  unit volume 
D)  market share 
E)  survival

Question 10

Unit volume as a pricing objective refers to

Accepted Answer

A)  the quantity of products to be produced or sold. 
B)  the ratio of price per unit to unit variable cost. 
C)  the ratio of production costs to the minimum sales price that would still generate profit. 
D)  the total quantity of product sold by a firm relative to the total quantity of product sold by all firms in the industry. 
E)  variable cost expressed on a per unit basis for a product.

Question 11

There are four major cereal brands-Kellogg's, Quaker, General Mills, and Post-that seem to occupy most of the shelf space in a typical grocery store. These cereals are all priced about the same. There is a good deal of product differentiation, from characters to different health claims. The cereal industry is an example of what type of competitive market?

Accepted Answer

A)  a pure monopoly 
B)  monopolistic competition 
C)  pure competition 
D)  monopolistic oligopoly 
E)  an oligopoly

Question 12

To increase value the most, marketers should

Accepted Answer

A)  decrease benefits. 
B)  decrease benefits and increase price. 
C)  decrease price and increase benefits. 
D)  decrease price and decrease benefits. 
E)  hold the price steady and let the perceived value of the item increase as it matures in its life cycle.

Question 13

A major grocery chain pays its baggers a regular hourly wage. The baggers not only pack the groceries, but they also will take customers' groceries to their car, regardless of the weather. The baggers are not permitted to accept tips, even if they are offered. The consumer will experience this as

Accepted Answer

A)  pricing enhancement. 
B)  societal pricing. 
C)  revenue sharing. 
D)  value pricing. 
E)  cost-plus pricing.

Question 14

Which statement would most likely be spoken while determining cost, volume, and profit relationships in the price-setting process?

Accepted Answer

A)  "In order to break even, we will need to sell at least 500,000 units." 
B)  "We have to try to achieve an 8 percent profit share." 
C)  "The starting price should be $4.99 and we can raise the price again in six months." 
D)  "But, if we increase the price even by $1, how many customers will we lose?" 
E)  "We should probably price the extra-large version somewhere between $600 and $650."

Question 15

Which of these illustrates movement along the demand curve?

Accepted Answer

A)  Demand increases due to a drop in price. 
B)  Demand increases due to a competitor leaving the market. 
C)  Demand increases due to consumer tastes changing. 
D)  Demand increases due to a competitor increasing its prices. 
E)  Demand increases due to an increase in consumer incomes.

Question 16

The practice of exchanging products and services for other products and services rather than for money is referred to as

Accepted Answer

A)  barter. 
B)  reciprocal pricing. 
C)  virtual pricing. 
D)  balance of payments. 
E)  value pricing.

Question 17

List four key factors used to estimate demand.

Accepted Answer

The answer of List four key factors used to estimate...

Exam 13: Building the Price Foundation