Question 1

Prestige pricing:

Accepted Answer

A)  equalizes supply and demand 
B)  uses high prices to promote a high-quality product 
C)  is the practice of marking up prices by 100 percent 
D)  is also called leader pricing 
E)  emphasizes the monetary nature of price

Question 2

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.What is the fixed cost contribution for the Roadster given average variable costs of $50,500?

Accepted Answer

A)  $50,500 
B)  $78,000 
C)  $128,500 
D)  $179,000 
E)  $500,000

Question 3

Which of the following would imply demand would be elastic?

Accepted Answer

A)  price is low relative to purchasing power 
B)  nondurable product 
C)  low inflation rate 
D)  many substitute products 
E)  all of these choices

Question 4

At Wal-Mart,Randi saw a bag of daffodil flower bulbs and a box of plant fertilizer.The items,which were sold together,retailed at $28.50,but were marked down to $19.99.The retailer sold one at the $28.50 price and five at the $19.99.The retailer's revenue is:

Accepted Answer

A)  $8.51 
B)  $19. 99 
C)  $28.50 
D)  $128.45 
E)  $171.00

Question 5

Yield management systems (YMS)were first used by Internet service providers.

Accepted Answer

A) True 
 B)False

Question 6

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.Suppose a Thai farmer sells 10 Kan Yao durians in the marketplace at the going rate of $200 each.If it cost a Thai farmer $125 to produce and market the Kan Yao durian that she has sold,the difference between these two numbers ($75),times the number sold (10),represents the farmers _____.

Accepted Answer

A)  ROI 
B)  revenue 
C)  profit 
D)  returns 
E)  COGS

Question 7

Monthly output at Leisure-Time,Inc.changed from 12 to 13 prefabricated gazebos,and the total costs changed from $9,000 to $10,500.What is the marginal cost for this company?

Accepted Answer

A)  $1,500 
B)  $2,000 
C)  $1,200 
D)  $10,000 
E)  $12,000

Question 8

For a nail salon,the costs associated with the purchase of nail polish and other products like nail polish remover,sterilized equipment,laundry service for the towels,and the beverages given to customers, are all examples of _____ costs.

Accepted Answer

A)  marginal 
B)  variable 
C)  fixed 
D)  promotional 
E)  liquidity

Question 9

Specialty Cakes
Imagine you're planning an after-symphony fund-raising party, and you need a life-size grand piano cake. Or, you are a developer proposing a new shopping center to a group of investors, and you want to serve a cake shaped like an architectural rendition of the center. Is this impossible? No, you just need to contact Cecilia Villaveces Cakes. She actually built a life-size grand piano for a gala in Macon, Georgia. You can expect to pay anywhere from $75 to $10,000 for one of Cecilia's artistic creations, depending on complexity of design and size. She uses only the best ingredients, and no two cakes are ever quite alike.
-Refer to Specialty Cakes.Many party planners in the Southeast will only use Cecilia Villaveces Cakes at their parties--no matter what the price is.They know that Cecilia's cakes can make a party a success.Moreover,the cakes are what people remember most about the parties.From this description,you should assume Cecilia Villaveces Cakes have a(n):

Accepted Answer

A)  elastic demand 
B)  unitary elasticity 
C)  inelastic supply 
D)  inelastic demand 
E)  elastic supply

Question 10

Behavioral targeting technology is being used by Internet retailers to offer different prices and promotional offers to different customers based upon their Internet and browsing habits. One potential downside to this practice is:

Accepted Answer

A)  lack of profits 
B)  consumer privacy 
C)  cost 
D)  reliability of the system 
E)  competitive pressure

Question 11

Laurie knows little about cooking and does not want to spend the time to learn how to make a quiche.However,she has been asked to bring a quiche to an office retirement party.Not wanting to make a poor choice,she is likely to:

Accepted Answer

A)  intuitively make the right choice 
B)  avoid making a decision by not attending the party 
C)  buy the most expensive pre-made quiche (perhaps paying too much), guessing that the price is related to quality 
D)  research the product and buy the least expensive frozen quiche she can find 
E)  buy the least expensive frozen quiche because most consumers feel that price is not directly related to quality

Question 12

Manufacturers can do all of the following to regain some control over the price their products are sold for at the retail level EXCEPT:

Accepted Answer

A)  require resellers to maintain prices in line with competitors' prices 
B)  developing brand loyalty in consumers by delivering quality and value 
C)  avoiding doing business with price-cutting discounters 
D)  franchising 
E)  using an exclusive distribution system

Question 13

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 14

Mitch owns a pet boarding kennel.The monthly payment on the land he purchased for his kennel,the mortgage on his small office building,and his business license are all examples of _____ costs.

Accepted Answer

A)  marginal 
B)  variable 
C)  fixed 
D)  promotional 
E)  demand

Question 15

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 16

_____ is the extra revenue associated with selling an additional unit of output.

Accepted Answer

A)  Average revenue 
B)  Marginal revenue 
C)  Marginal cost 
D)  Net profit 
E)  Average variable cost

Question 17

The Nest is a retail store owned and operated by an interior designer. The markup on all items in the store is 100 percent over cost (or double the cost).In this case we would say that the designer uses:

Accepted Answer

A)  keystoning 
B)  target ROI pricing 
C)  break-even pricing 
D)  marginalizing 
E)  double sourcing

Question 18

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.The durian fruit is a very unique product.To many Thai's no other fruit taste or smells anything like the durian.It's uniqueness,in the eyes of the customer,would tend to have which of the following

Accepted Answer

A)  It would have little affect. 
B)  It would tend to make the durian more price elastic. 
C)  It would tend to make the durian more price inelastic. 
D)  It would tend to raise the price in comparison to purchasing power. 
E)  It would tend to impact the durian's stage in the PLC.

Question 19

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 20

Define price and discuss the two roles price plays in the evaluation of product alternatives.

Accepted Answer

The answer of Define price and discuss the two roles...

Exam 19: Pricing Concepts