Question 1

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 2

SHAPE magazine is targeted at young women seeking healthier lifestyles.At a price of $3 per copy,1.25 million copies are sold.If the price per issue is increased to $3.25,only 1 million copies would be sold.Fixed costs are $1 million and unit variable costs are $0.50 per magazine.From the information provided here,what is SHAPE magazine's total revenue obtained at the lower $3 price?

Accepted Answer

A) $3,750,000 
B) $3,250,000 
C) $3,000,000 
D) $2,125,000 
E) $1,750,000

Question 3

The practice of simultaneously increasing product and service benefits while maintaining or decreasing price is referred to as

Accepted Answer

A) value pricing. 
B) customer-value pricing. 
C) competitive pricing. 
D) cost pricing. 
E) demand pricing.

Question 4

A break-even chart is a graphic presentation

Accepted Answer

A) that shows the maximum number of units that will be sold at a certain price. 
B) of a break-even analysis that shows when total revenue and total cost intersect to identify profit or loss for a given quantity sold. 
C) that relates variable costs in terms of product or service substitutes in order to determine which items or services would least affect total revenues. 
D) that relates profits and revenues versus total costs in order to determine the time frame in which a company could achieve profitability. 
E) is a form of scatter graph used to identify specific activities or items that are creating the greatest return on investment.

Question 5

In a snack vending machine,consumers can select one of many choices.These snacks are

Accepted Answer

A) an ideal example of unitary demand. 
B) likely to have a price elasticity equal to 1. 
C) more likely to be price elastic. 
D) likely to have a price elasticity less than 1. 
E) more likely to be price inelastic.

Question 6

Given that a firm's profit is high enough for it to remain in business,an objective may be to ________,which will in turn lead to increases in market share and profit.

Accepted Answer

A) increase the commitment to social responsibility 
B) increase dollar sales revenue 
C) decrease unit volume while maintaining price 
D) increase research and development funding for new product line extensions 
E) continue with previous policies that seem to be working

Question 7

An analysis of a prospective product shows that sales for it are expected to grow by at least 10 percent each year over the next five years before it enters the maturity phase of its product life cycle.This type of analysis would provide useful information in which step of the price-setting process?

Accepted Answer

A) identifying pricing objectives and constraints 
B) determining cost,volume,and profit relationships 
C) estimating demand and revenue 
D) selecting an appropriate (approximate)price lining strategy 
E) making special adjustments to list or quoted price

Question 8

Figure 13-6
  
 
-Figure 13-6 above depicts a

Accepted Answer

A) Gantt chart. 
B) demand curve. 
C) break-even chart. 
D) ROI analysis. 
E) cross-tabulation.

Question 9

VIZIO is the market leader in the North American ________ market.

Accepted Answer

A) designer eyewear 
B) virtual media 
C) smart TV 
D) 3-D video game 
E) exotic travel

Question 10

Figure 13-3
 
-In Figure 13-3 above,column B represents which type of competitive market?

Accepted Answer

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

Question 11

Value pricing refers to

Accepted Answer

A) the ratio of perceived benefits to price. 
B) the money or other considerations exchanged for the ownership or use of a product or service. 
C) the practice of simultaneously increasing product and service benefits while maintaining or decreasing price. 
D) the ratio of price to perceived benefits. 
E) list price minus incentives and allowances plus extra fees.

Question 12

Marketers may engage in value pricing,which is the practice of simultaneously ________ while maintaining or decreasing price.

Accepted Answer

A) promoting specific product and service benefits 
B) increasing product and service benefits 
C) decreasing profit 
D) analyzing benefits 
E) decreasing cost

Question 13

Suppose you are the owner of a picture frame store and you wish to calculate how many pictures you must sell to cover your fixed and variable costs at a given price.Demand for pictures is strong,so the average price customers are willing to pay for each picture frame is $120.Also,suppose your fixed costs (FC)total $32,000 (real estate taxes,interest on a bank loan,etc. )and unit variable cost (UVC)for a picture frame is $40 (labor,glass,frame,and matting).What is the quantity of picture frames you will need to sell to break even?

Accepted Answer

A) 200 picture frames 
B) 400 picture frames 
C) 800 picture frames 
D) 1,600 picture frames 
E) 2,000 picture frames

Question 14

The ratio of the firm's sales revenues or unit sales to those of the industry (competitors plus the firm itself)is referred to as

Accepted Answer

A) target return on sales. 
B) industry profit. 
C) unit volume. 
D) market share. 
E) profit.

Question 15

All of the following are examples of pricing objectives except which?

Accepted Answer

A) market share 
B) survival 
C) unit sales 
D) social responsibility 
E) product obsolescence

Question 16

Break-even analysis refers to

Accepted Answer

A) a process that investigates the difference between marginal revenue and marginal cost. 
B) a method of determining just how much a consumer is willing to pay for a product or service. 
C) a technique that analyzes the relationship between total revenue and total cost to determine profitability at various levels of output. 
D) the process of determining the quantity of product consumers will buy relative to the quantity produced by the firm. 
E) the graph that shows the maximum number of products consumers will buy at a given price.

Question 17

Which of the following statements about price elasticity of demand is most accurate?

Accepted Answer

A) The more substitutes a product has,the more likely it is to be price elastic. 
B) All products show some price inelasticity. 
C) Nondiscretionary (necessary)purchases are price elastic. 
D) With inelastic demand,reducing price has a very large impact on revenues. 
E) With inelastic demand,manufacturers change prices frequently to capitalize on consumer behavior.

Question 18

If competitive market circumstances are such that there is no price competition,no product differentiation,and the purpose of advertising is to increase demand for the product class,then ________ must exist in the industry.

Accepted Answer

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

Question 19

Susan hired an attorney to represent her in a court case involving an auto accident.The attorney charged her a $2,000 retainer fee for the services.Terry needed a haircut;the local stylist charged him $12 for his services.Aaron mowed his neighbor's lawn;in exchange,the neighbor repaired his gutters.The attorney fees,the $12 charged by the hair stylist,and the exchange of lawn mowing for gutter repair are all examples of

Accepted Answer

A) premiums. 
B) barter. 
C) the profit motive. 
D) price. 
E) outlays.

Question 20

Barter refers to

Accepted Answer

A) a reciprocity agreement stipulating that if company A purchases services from company B,then company B must purchase similar services from company A. 
B) a tying agreement stipulating that if company A purchases a product from company B,it must also purchase one of its services. 
C) the practice of exchanging products and services for other products and services rather than for money. 
D) the practice of exchanging services for products of equal or greater value. 
E) the practice of exchanging products and services for money.

Exam 13: Building the Price Foundation

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