Question 1

How could a department store attempt to manipulate the reference prices of women's apparel?

Accepted Answer

The answer of How could a department store attempt to...

Question 2

Prior research has shown that although consumers may have fairly good knowledge of the range of prices involved, surprisingly few can recall specific prices of products accurately. When examining products, consumers often employ reference prices. List the possible prices consumers' use as their "reference."

Accepted Answer

The answer of Prior research has shown that although consumers...

Question 3

Texas Instruments builds a large plant to produce a great quantity of products, hoping that as prices decline, sales volume increases and thus costs decline. What pricing strategy has TI used in order to maximize their market share?

Accepted Answer

A)  reference pricing 
B)  marketing skimming pricing 
C)  objective pricing 
D)  market penetration pricing 
E)  survival pricing

Question 4

If variable costs are $10 per unit, fixed costs are $300 000, and expected unit sales are 50 000 the unit cost is

Accepted Answer

A)  $20.00. 
B)  $16.00. 
C)  $10.00. 
D)  $12.00. 
E)  $6.00.

Question 5

When the salesperson at the local "luxury" car dealer pitches a customer on the dealer's "free maintenance for 36 months or 36 000 miles whichever comes first," the salesperson is trying to overcome the car's initial high cost by using what method?

Accepted Answer

The answer of When the salesperson at the local "luxury"...

Question 6

One factor leading to price increases is overdemand. When a company cannot supply all of its customers, it can raise its prices, ration supplies to customers, or both. What are four different ways the price can be raised?

Accepted Answer

The answer of One factor leading to price increases is...

Question 7

When a consumer buys a $100 bottle of perfume containing $10.00 worth of materials, the gift giver is communicating their high regard to the receiver and this represents the concept of ________ in pricing.

Accepted Answer

A)  reference prices 
B)  maximum current profit 
C)  price leadership 
D)  price cues 
E)  price-quality relationship

Question 8

IKEA and WestJet Airlines are among the best practitioners of value pricing--win loyal customers by charging a fairly low-price for a high-quality offering. Why is value pricing not a matter of simply lowering prices?

Accepted Answer

The answer of IKEA and WestJet Airlines are among the...

Question 9

Generally, consumers prefer ________ price increases on a regular basis to sudden, sharp increases.

Accepted Answer

A)  reciprocal 
B)  consistent 
C)  trade 
D)  large 
E)  small

Question 10

After determining its pricing objectives, what is the next logical step a firm should take in setting its pricing policy?

Accepted Answer

A)  It should analyze its competitors' costs, prices, and offers. 
B)  It should select its pricing method. 
C)  It should determine the demand for its product. 
D)  It should select its final price. 
E)  It should estimate the cost of its product.

Question 11

If demand hardly changes with a small change in price, we say that the demand is

Accepted Answer

A)  profitable. 
B)  elastic. 
C)  marginal. 
D)  inelastic. 
E)  equal.

Question 12

When the price of a gallon of milk increases by $0.50, consumers notice this increase immediately. This is an example of what concept in the understanding of consumer price sensitivity.

Accepted Answer

A)  Customers often miss the just noticeable difference. 
B)  Customers are less sensitive to disposable products. 
C)  Customers are most sensitive to products that are bought frequently. 
D)  Customers are most sensitive to food products. 
E)  Customers are most sensitive to grocery products.

Question 13

One of the traps of instituting a price decrease is when that low price buys market share in the short term. The same customers will shift to any lower-priced product that may come along. This trap is called

Accepted Answer

A)  low-quality trap. 
B)  shallow-pockets trap. 
C)  fragile-market-share trap. 
D)  low price trap. 
E)  market loyalty trap.

Question 14

Many consumers use price as an indicator of quality and value.

Accepted Answer

A) True 
 B)False

Question 15

In ________ the retailer charges higher prices on an everyday basis but then runs frequent promotions in which prices are temporarily lowered below the EDLP level.

Accepted Answer

A)  high-low pricing 
B)  EDLP pricing 
C)  going-rate pricing 
D)  value pricing 
E)  everyday low pricing

Question 16

________ is the result of a concentrated effort by designers, engineers, and purchasing agents to reduce the product's overall costs.

Accepted Answer

A)  Target costing 
B)  Activity-based cost accounting 
C)  Learning curve 
D)  Least cost producer 
E)  Experience curve

Question 17

The popularity of "early-bird" specials at restaurants is an example of what type of price discrimination?

Accepted Answer

A)  customer-segment pricing 
B)  product-form pricing 
C)  channel pricing 
D)  image pricing 
E)  time pricing

Question 18

________ consists of the sum of the fixed and variable costs for any given level of production.

Accepted Answer

A)  Fixed costs 
B)  Total costs 
C)  Variable costs 
D)  Manufacturing costs 
E)  Delivery costs

Question 19

An increasing number of companies are basing their pricing on perceived value, which is the value that the consumer decides the product is worth and is the same across all incomes and regions of the company.

Accepted Answer