Question 1

A product that has more features than those of its competition, or that is perceived to be of higher quality, warrants using:

Accepted Answer

A)  custom pricing. 
B)  special-event pricing. 
C)  premium pricing 
D)  price lining. 
E)  bait pricing.

Question 2

The pricing of Clinique makeup, considerably higher than brands such as Cover Girl, Revlon, and Maybelline, is most likely used to communicate .

Accepted Answer

A)  market share 
B)  product quality 
C)  status quo 
D)  profitability 
E)  cash flow

Question 3

The government frequently uses competition-based pricing in granting defense contracts.

Accepted Answer

A) True 
 B)False

Question 4

Which pricing objective de-emphasizes price and can lead to a climate of non-price competition in an industry?

Accepted Answer

A)  Status quo 
B)  Return on investment 
C)  Market share 
D)  Survival 
E)  Cash flow

Question 5

Fixed costs vary with the number of units produced or sold.

Accepted Answer

A) True 
 B)False

Question 6

A firm can survive in the long run only if its products are sold below cost.

Accepted Answer

A) True 
 B)False

Question 7

If the price is quoted as F.O.B. origin pricing, then shipping costs are paid by the seller.

Accepted Answer

A) True 
 B)False

Question 8

The Highland Racquet Club found that with annual fixed costs of $60,000, its break-even point is 2,000 members when the membership charge is $60 per person per year. What is the variable cost per person for Highland?

Accepted Answer

A)  $45 
B)  $50 
C)  $30 
D)  $25 
E)  $40

Question 9

Penetration pricing and price skimming of the market are two types of new-product pricing strategies.

Accepted Answer

A) True 
 B)False

Question 10

The frozen foods division of Swanson purchases food trays and boxes from the packaging division. The form of pricing used to charge the frozen foods division is called:

Accepted Answer

A)  zone pricing. 
B)  base-point pricing. 
C)  business-unit pricing. 
D)  transfer pricing. 
E)  price discrimination.

Question 11

If Pacific Power and Light increased its rates by 10 percent and the demand for power remained the same, the demand would be:

Accepted Answer

A)  elastic. 
B)  minimal. 
C)  minor elasticity. 
D)  variable. 
E)  inelastic.

Question 12

The way that pricing is used in the marketing mix will influence the determination of the final price.

Accepted Answer

A) True 
 B)False

Question 13

Ideally, a pricing strategy has little relation to a firm's marketing objectives.

Accepted Answer

A) True 
 B)False

Question 14

Competition-based pricing is:

Accepted Answer

A)  used when costs and revenues are secondary to competitors' prices. 
B)  not a useful method to increase market share. 
C)  not useful if the competing products are homogeneous. 
D)  used to price above competitors' prices. 
E)  used when competing products are heterogeneous.

Question 15

If Colgate-Palmolive wants to maximize profit on its toothpaste, it should operate at the point where:

Accepted Answer

A)  total costs and total revenues are equal. 
B)  marginal revenue is at its highest level. 
C)  marginal revenue exceeds marginal cost. 
D)  marginal revenue equals marginal cost. 
E)  demand is most elastic.

Question 16

The objective of profit maximization is rarely operational because its achievement is difficult to measure.

Accepted Answer

A) True 
 B)False

Question 17

Rent is usually a fixed cost.

Accepted Answer

A) True 
 B)False

Question 18

If Carnival Cruise Lines increased the price of its seven-day cruise package by 10 percent and, as a result, experienced a 20 percent decline in customer bookings, Carnival's demand would be:

Accepted Answer

A)  steady. 
B)  inelastic. 
C)  elastic. 
D)  prestige. 
E)  marginal.

Question 19

Knowing the number of units necessary to break even is important in setting the price.

Accepted Answer

A) True 
 B)False

Question 20

Scenario 12.4
Use the following to answer the questions.
The BASF Chemical Company in Germany has developed a new rubberized coating. The product is used on cell phones and other hand-held electronic devices that give them protection from falls and scratches. BASF plans to market the product directly to businesses that manufacture the casings for these types of products. BASF currently uses a system of salespeople headquartered in Germany, while its primary business customers are in China.
-Refer to Scenario 12.4. If BASF were to price its products in barrels from the factory, before it is loaded on the carrier, this would be an example of pricing.

Accepted Answer

A)  buy-back allowance 
B)  geographic 
C)  F.O.B destination 
D)  F.O.B. origin 
E)  base-point

Exam 12: Pricing Concepts and Management

A product that has more features than those of its competition, or that is perceived to be of higher quality, warrants using:

The pricing of Clinique makeup, considerably higher than brands such as Cover Girl, Revlon, and Maybelline, is most likely used to communicate .

The government frequently uses competition-based pricing in granting defense contracts.

Which pricing objective de-emphasizes price and can lead to a climate of non-price competition in an industry?

Fixed costs vary with the number of units produced or sold.

A firm can survive in the long run only if its products are sold below cost.

If the price is quoted as F.O.B. origin pricing, then shipping costs are paid by the seller.

The Highland Racquet Club found that with annual fixed costs of $60,000, its break-even point is 2,000 members when the membership charge is $60 per person per year. What is the variable cost per person for Highland?

Penetration pricing and price skimming of the market are two types of new-product pricing strategies.

The frozen foods division of Swanson purchases food trays and boxes from the packaging division. The form of pricing used to charge the frozen foods division is called:

If Pacific Power and Light increased its rates by 10 percent and the demand for power remained the same, the demand would be:

The way that pricing is used in the marketing mix will influence the determination of the final price.

Ideally, a pricing strategy has little relation to a firm's marketing objectives.

Competition-based pricing is:

If Colgate-Palmolive wants to maximize profit on its toothpaste, it should operate at the point where:

The objective of profit maximization is rarely operational because its achievement is difficult to measure.

Rent is usually a fixed cost.

If Carnival Cruise Lines increased the price of its seven-day cruise package by 10 percent and, as a result, experienced a 20 percent decline in customer bookings, Carnival's demand would be:

Knowing the number of units necessary to break even is important in setting the price.