Question 1

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.Over the past two years,the price for Kan Yao durian fruit has increased by 50 percent.If the amount sold has remained almost constant,we would say that demand is:

Accepted Answer

A)  elastic 
B)  inelastic 
C)  unitary 
D)  highly elastic 
E)  moderately elastic

Question 2

At Walmart,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 price.The retailer's revenue is:

Accepted Answer

A)  $8.51 
B)  $19.99 
C)  $28.50 
D)  $128.45 
E)  $171.00

Question 3

Name two advantages and two disadvantages associated with the use of break-even analysis.

Accepted Answer

The answer of Name two advantages and two disadvantages associated...

Question 4

American Girl Doll
The American Girl catalog began as a concept to introduce today's girls to those who lived in the past. Each historically accurate doll is carefully crafted and dressed and has books to describe her life. For example, Kristen is an 1854 pioneer girl who is growing up in Minnesota. Her story begins with her long sea voyage from Sweden. The basic doll, dressed in a calico dress and striped apron plus the hardcover story of how she got to Minnesota, costs $90.00. Six more hardback books of Kristen's life are available for $74.95. Kristen's nightgown costs $20.00, and a matching one for the doll owner is an additional $38.00. Buy both together and the price is only $50.00. A hand-painted wooden bed and trunk for Kristen are available for $213.00. Shipping costs vary with the price of the merchandise ordered.
-Refer to American Girl Doll.What is the revenue to American Girl if it sells 20 basic Kristen dolls?

Accepted Answer

A)  $90.00 
B)  $100.95 
C)  $427.95 
D)  $1,800.00 
E)  $3,600.00

Question 5

When a seller determines the selling price by adding to cost an amount for profit and expenses not previously accounted for,the seller is using _____ pricing.

Accepted Answer

A)  profit maximization 
B)  demand-oriented 
C)  break-even 
D)  target return 
E)  markup

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 that a Thai farmer sells ten 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 (ten),represents the farmer's:

Accepted Answer

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

Question 7

Price is best described as:

Accepted Answer

A)  that which is given up in exchange to acquire a good or service 
B)  money exchanged for a good or service 
C)  the psychological results of purchasing 
D)  the cost in dollars for a good or service as set by the producer 
E)  the value of a barter good in an exchange

Question 8

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

Question 9

_____ occurs when an increase in sales exactly offsets a decrease in price so that total revenue remains exactly the same.

Accepted Answer

A)  Inelastic demand 
B)  Functional elasticity of demand 
C)  Unitary elasticity 
D)  Highly elastic demand 
E)  Fixed elasticity

Question 10

An office supply store can buy a desk for $300.If the store owner sells the desk for $450,what is the markup based on the selling price?

Accepted Answer

A)  15 percent 
B)  20 percent 
C)  25 percent 
D)  33 percent 
E)  50 percent

Question 11

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 12

Which of the following statements about pricing strategies throughout the product life cycle is NOT true?

Accepted Answer

A)  During product decline, prices may also decline until there is only one competitor left in the market. 
B)  Price increases during the maturity stage are cost initiated instead of demand initiated. 
C)  The maturity stage often brings about price decreases. 
D)  Prices stabilize when the product enters the growth stage. 
E)  With inelastic demand, price will be set low during the introduction stage.

Question 13

At Walmart,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 $19.99 is the:

Accepted Answer

A)  revenue. 
B)  price. 
C)  profit. 
D)  liquidity value. 
E)  amortized value.

Question 14

Research has shown that products perceived to be of high quality tend to benefit less from price promotions than products perceived to be of lower quality.

Accepted Answer

A) True 
 B)False

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.Say 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

As a product moves through its life cycle,the demand for the product and the competitive conditions tend to change.For each stage in the product life cycle,discuss pricing strategies appropriate for that stage.

Accepted Answer

The answer of As a product moves through its life...

Question 17

Research indicates that when a country's inflation rate is high,demand becomes more elastic.

Accepted Answer

A) True 
 B)False

Question 18

For convenience,pricing objectives can be divided into three categories.They are:

Accepted Answer

A)  refundable, competitive, and attainable 
B)  perceived, actual, and unique-situational 
C)  differentiated, niche, and undifferentiated 
D)  profit oriented, sales oriented, and status quo 
E)  monopolistic, fixed, and variable

Question 19

_____ costs do not change as output is increased or decreased.

Accepted Answer

A)  Asset 
B)  Variable 
C)  Fixed 
D)  Symmetrical 
E)  Status quo

Question 20

Which of the following is most likely to be a variable cost for an Internet retailer that sells spices,herbs,and seasonings to consumers?

Accepted Answer

A)  Annual lease on mixer used to blend seasonings 
B)  Executive salaries 
C)  Rent for building where spices and herbs are repackaged for consumers 
D)  Workers' insurance 
E)  Postage for shipping spices and herbs

Exam 37: Pricing Concepts