Question 1

Describe a situation where you,as a consumer,often associate price with quality.

Accepted Answer

The answer of Describe a situation where you,as a consumer,often...

Question 2

Chet knows the pro shops selling his golf photography will "keystone" his products.He also knows sales will decline significantly if the retail price is greater than $200.The maximum wholesale price Chet can charge is:

Accepted Answer

A)  $200. 
B)  $100. 
C)  $50. 
D)  $10. 
E)  It cannot be determined from this information.

Question 3

Often,at the beginning of a semester,professors are encouraged or directed to allow students to be added to a class after the course has started.For the university,the variable cost of adding another student to a class:

Accepted Answer

A)  is the cost of the instructor. 
B)  is the cost of energy in the classroom. 
C)  is the cost of adding another administrator. 
D)  is the cost of expanding the parking lot. 
E)  is next to nothing.

Question 4

At the break-even point:

Accepted Answer

A)  costs are zero. 
B)  price is maximized. 
C)  profits are zero. 
D)  fixed costs are zero. 
E)  contribution per unit is zero.

Question 5

Naomi tells her sales representatives the goal is to generate at least a 20 percent return on investment for all of the industrial building supplies they sell.Naomi is using a __________ pricing strategy.

Accepted Answer

A)  sales orientation 
B)  target profit 
C)  target return 
D)  status quo 
E)  competitive parity

Question 6

If Brandon buys hats for his store for $5 each and sells them for $15 each,he is using a keystoning pricing strategy.

Accepted Answer

A) True 
 B)False

Question 7

If a telecommunications company drastically cuts the price for cellular phone service in order to eliminate local competitors,the company could be charged with:

Accepted Answer

A)  loss leader pricing. 
B)  bait and switch pricing. 
C)  price fixing. 
D)  unfair slotting. 
E)  predatory pricing.

Question 8

Most public colleges charge less than half the price of similar private colleges.How can each type of college be delivering value?

Accepted Answer

The answer of Most public colleges charge less than half...

Question 9

Brands that have developed loyal customers have a higher price elasticity of demand.

Accepted Answer

A) True 
 B)False

Question 10

Rodi owns Hallman's auto repair service.He has observed over the years that customers keep their high-mileage cars longer when the economy is doing poorly,creating demand for his maintenance and repair service.Rodi has observed the impact of __________ on demand for his service.

Accepted Answer

A)  breakeven points 
B)  the price inelasticity ratio 
C)  the income effect 
D)  target profit pricing 
E)  cross-price elasticity

Question 11

For marketers using a price skimming strategy,once the initial demand is met for new and innovative products,they will likely:

Accepted Answer

A)  leave the market. 
B)  discontinue the product and create a new one. 
C)  offer deep discounts in order to create a loss leader pricing strategy. 
D)  lower the price to capture the next most price sensitive market segment. 
E)  use zone pricing to maximize differences.

Question 12

In general,prices should not be based on costs because:

Accepted Answer

A)  consumers are cost-conscious. 
B)  producers rarely know what their costs are. 
C)  consumers make their purchase decisions based on perceived value. 
D)  producers need to avoid creating a cost competitive parity debate. 
E)  customers are always right.

Question 13

__________ pricing tactics lower the price of a product below cost.

Accepted Answer

A)  Fixed 
B)  Zone 
C)  Regular 
D)  Loss leader 
E)  Cost-based

Question 14

In determining the price for his company's new pocket digital camera,Matt is assessing what consumers consider the regular or original price for similar cameras available in the market.Matt is assessing the influence of __________ on pricing strategy.

Accepted Answer

A)  improvement value 
B)  odd-even prices 
C)  everyday low pricing 
D)  reference prices 
E)  cost of ownership

Question 15

Developing a good pricing strategy is essential to the financial well-being of a firm.Even though a firm has an excellent strategy,what are continuing threats to the strategy?

Accepted Answer

The answer of Developing a good pricing strategy is essential...

Question 16

Marketer of products and services associated with the wedding industry know that customers often do not care what the price is.They just want the wedding to be perfect.For these customers demand,is likely to be:

Accepted Answer

A)  cross-price elastic. 
B)  derived demand elastic. 
C)  price elastic. 
D)  status quo elastic. 
E)  price inelastic.

Question 17

Price advertisements should never:

Accepted Answer

A)  include "puffery." 
B)  deceive customers to the point of doing harm. 
C)  include the price. 
D)  use advertising allowances to increase sales promotion. 
E)  use price skimming after using price penetration.

Question 18

If the Amador County Pest Control Association got together and all members agreed to charge 3 percent of the value of a home for a termite inspection letter,the association members would be engaging in:

Accepted Answer

A)  loss leader pricing. 
B)  bait and switch pricing. 
C)  horizontal price fixing. 
D)  monopolistic competition. 
E)  predatory pricing.

Question 19

Liz and Sarah watched the prices of all the ingredients in their line of specialty sauces go up and up.Now,transportation costs were going through the roof.Liz suggested they could raise prices to cover these expenses because customers would understand.Which of these is the most important factor Liz and Sarah should consider before raising prices?

Accepted Answer

A)  The costs might go back down again. 
B)  They will have to adjust their promotional literature. 
C)  Customers do not care about the company's costs; they care about value. 
D)  Rental costs for their production facility might go up next. 
E)  Consumers do not think about the cost of additional items; they are concerned mostly with the total cost for a visit to a store.

Question 20

The observation that consumers are generally more sensitive to price increases than to price decreases suggests that:

Accepted Answer

A)  most consumers cannot remember what price they paid the last time they bought a particular product. 
B)  it is easier to lose customers with a price increase than to gain customers with a price decrease. 
C)  most consumers would rather skip buying a product than pay a higher price. 
D)  most consumers are emotionally attached to their favorite products and are unlikely to change,even if the price changes. 
E)  firms gain more customers with price decreases than they lose with price increases.

Exam 13: Pricing Concepts for Establishing Value