Question 1

List the two primary determinants of price.What other factors can affect price setting?

Accepted Answer

The answer of List the two primary determinants of price.What...

Question 2

Smelly Fruit
At first glance,there is little to like about the durian.The durian is a fruit popular in Thailand that is spiky outside and stinky on the inside.When confronted with the durian for the first time,the Wall Street Journal recently reported that westerners often describe its distinctive sulphurous smell with words like stinky socks and manure.However,the durian is so popular in Thailand that one variety of the durian fruit,called the Kan Yao,has been selling for as high as $200.Even at that price,supply of the Kan Yao cannot keep up with demand.There are approximately 30 varieties of the durian grown in Thailand,with the most plentiful selling in the $15 range.The yellow flesh of the durian,the part you eat,has very powerful smell but possesses a sweet,nutty taste that Thais cannot seem to get enough of at any price.
-Refer to Smelly Fruit.If it cost a Thai farmer $100 to produce and $25 to market the Kan Yao durian that she sells for $200 at the marketplace,her revenue,for each durian sold,would be:

Accepted Answer

A) $125 
B) $200 
C) $25 
D) $100 
E) $325

Question 3

Ceylon Express sells bottled pasteurized tea to retailers.It has the following revenues and costs:

What is the annual break-even point in units for the company?

Accepted Answer

A) 50,000 
B) 250,000 
C) 100,000 
D) 166,667 
E) 500,000

Question 4

_____ is equal to net profit after taxes divided by total assets.

Accepted Answer

A) Return on investment 
B) Economic order quantity 
C) Target-on-sales 
D) Retained earnings 
E) Efficiency maximization

Question 5

Pricing power is all about:

Accepted Answer

A) profit maximization 
B) eliminating price wars between competitors 
C) perceived value to the customer 
D) long-term maximization of cash 
E) eliminating the competition

Question 6

The _____ is the quantity of a product that will be sold in the market at various prices for a specified period,and _____ is the quantity of a product that will be offered to the market by suppliers at various prices for a specified period.

Accepted Answer

A) demand;equity 
B) demand;supply 
C) supply;demand 
D) inventory;demand 
E) inventory;supply

Question 7

In most communities,the price of gas is more or less the same at all area service stations.This is an example of sales-oriented pricing.

Accepted Answer

A) True 
 B)False

Question 8

Many consumers,especially when faced with an uncertain purchase decision,think that a high price:

Accepted Answer

A) is a signal of quality. 
B) is an indication that consumers are being ripped off. 
C) will always lead to major price discounts to wholesalers and retailers that distribute it. 
D) is a sign of the company's overall market share. 
E) indicates that the brand was slipping into the decline stage of the product life cycle but has had a sudden resurgence of growth.

Question 9

When Apple,Inc.developed and introduced the iPhone,it was unique as it essentially combined a cellular phone with an iPod,an Internet browser,and e-mail capabilities.As such,in the short run,it seemed that demand for the product would be inelastic,with no real existing competition.The recommend pricing strategy in such a situation would be:

Accepted Answer

A) low initial price,rising slightly when entering the growth stage. 
B) high initial price,falling slightly when entering the growth stage. 
C) high price,continuing through growth and maturity. 
D) low price,continuing through growth and maturity. 
E) low price initially,rising constantly through growth and into maturity.

Question 10

What is marginal revenue? Based on the provided schedule from the Chesapeake Bay Swing Company,at which quantity should Chesapeake Bay stop producing additional swings?

Accepted Answer

The answer of What is marginal revenue? Based on the...

Question 11

The B2B Internet auction world is shifting from using warranties,delivery dates,and financing options as bargaining chips to haggling over prices.

Accepted Answer

A) True 
 B)False

Question 12

The daily demand for bottled water is 35 bottles when the price is set at $1.However,if the price is raised to $5,the demand is only 5 bottles.The bottled water producer is willing to supply 40 bottles if the price is set at $5 per bottle but will only supply 10 bottles if the price is set at $2.Draw the supply and demand curves for the water bottles on the graph below.Label each curve and each axis.At what level does equilibrium occur? What are the areas of surplus and shortage?

Accepted Answer

The answer of The daily demand for bottled water is...

Question 13

Tesla Motors
"Going green" doesn't have to be boring.The Tesla Roadster Sport is an electric car that goes from 0 to 60 in four seconds and drives more like a race car than an environmentally friendly ride.But that level of performance will set you back $128,500.As of 2009,Silicon Valley-based Tesla Motors,Inc.was the only company offering highway-compatible electric cars.Most Roadster Sport buyers are car enthusiasts and are buying them for the "fun toy" aspect of having an electric car rather than for environmental reasons.
-Refer to Tesla Motors.Tesla set the price of the Roadster high because the company wanted to promote a high-quality image.What type of pricing does this represent?

Accepted Answer

A) Prestige pricing 
B) Elite pricing 
C) Penetration pricing 
D) Quality pricing 
E) Complete pricing

Question 14

What is a break-even point? The Catera Company makes and sells cotton candy machines.What is the break-even volume for Catera machines in units?

Accepted Answer

The answer of What is a break-even point? The Catera...

Question 15

Using Groupon coupons is first and foremost to generate a sale,any sale.

Accepted Answer

A) True 
 B)False

Question 16

Thompson Pool and Patio is known for quality pool installations,excellent customer service,and reasonable prices.If you want to have a Thompson pool,you will have to wait about six months due to demand for their product.While Thompson could probably price its product higher,given the demand,they don't.Instead,the company sets its price so that it will earn a reasonable level of profits.Thompson seems to base its pricing policy on:

Accepted Answer

A) profit maximization. 
B) earning satisfactory profits. 
C) creating retained earnings. 
D) making the most money as possible. 
E) decreasing consumer demand.

Question 17

Money that is left over after paying for company activities is called:

Accepted Answer

A) return on investment. 
B) a contribution margin. 
C) profit. 
D) net worth. 
E) a current asset.

Question 18

_____ is the quantity of a product that will be offered to the market at various prices for a specified period.

Accepted Answer

A) Distribution 
B) Supply 
C) Price 
D) Equilibrium 
E) Elasticity

Question 19

Shopping bots:

Accepted Answer

A) encourage a more creative use of advertising. 
B) link manufacturers,suppliers,and customers. 
C) create opportunities for prestige pricing. 
D) provide a means for comparison shopping. 
E) create inelastic demand.

Question 20

High purchase prices may create feelings of pleasure and excitement in consumers.

Accepted Answer

A) True 
 B)False

Exam 19: Pricing Concepts

List the two primary determinants of price.What other factors can affect price setting?

Ceylon Express sells bottled pasteurized tea to retailers.It has the following revenues and costs: What is the annual break-even point in units for the company?

_____ is equal to net profit after taxes divided by total assets.

Pricing power is all about:

The _ is the quantity of a product that will be sold in the market at various prices for a specified period,and _ is the quantity of a product that will be offered to the market by suppliers at various prices for a specified period.

In most communities,the price of gas is more or less the same at all area service stations.This is an example of sales-oriented pricing.

Many consumers,especially when faced with an uncertain purchase decision,think that a high price:

What is marginal revenue? Based on the provided schedule from the Chesapeake Bay Swing Company,at which quantity should Chesapeake Bay stop producing additional swings?

The B2B Internet auction world is shifting from using warranties,delivery dates,and financing options as bargaining chips to haggling over prices.

What is a break-even point? The Catera Company makes and sells cotton candy machines.What is the break-even volume for Catera machines in units?

Using Groupon coupons is first and foremost to generate a sale,any sale.

Money that is left over after paying for company activities is called:

_____ is the quantity of a product that will be offered to the market at various prices for a specified period.

Shopping bots:

High purchase prices may create feelings of pleasure and excitement in consumers.