Question 1

Ryan gave the manager of his convenience store a set of binoculars so she could see the gasoline prices charged by the other convenience store at that intersection.Ryan told the manager to always match the gasoline prices of the other store.Ryan is using a _____________________ pricing strategy.

Accepted Answer

A)   maximizing profits
B)   target profit
C)   target return
D)   status quo
E)   sales D

Question 2

Price is the cash expenditure plus taxes that consumers have to pay for a good or service.

Accepted Answer

A) True 
 B)False  False

Question 3

_________________ measures consumers' sensitivity to price changes.

Accepted Answer

A)   Cross-price elasticity of demand
B)   Price elasticity of demand
C)   Income elasticity of demand
D)   Competitive profit elasticity of demand
E)   Inelastic demand price parity B

Question 4

A customer orientation toward pricing implicitly invokes the concept of

Accepted Answer

A)   knowing the dimensions of the target market.
B)   positioning.
C)   the income effect.
D)   value.
E)   None of these.

Question 5

Marketers spend millions of dollars annually trying to create or reinforce brand loyalty.Brand loyalty changes the demand curve for the firm's products by

Accepted Answer

A)   reducing the price elasticity of demand.
B)   making demand more oligopolistic and less monopolistic.
C)   increasing the income effect.
D)   reducing fixed costs and increasing the gray marketing effect.
E)   shifting the market from a monopoly to pure competition.

Question 6

In a market with _______________,there are many firms providing differentiated products.

Accepted Answer

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

Question 7

Price elasticity of demand is the

Accepted Answer

A)   percentage change in quantity demanded divided by the percentage change in price.
B)   percentage change in price divided by percentage change in quantity demanded.
C)   change in price divided by change in quantity demanded.
D)   change in quantity demanded divided by the change in price.
E)   change in quantity demanded multiplied by the change in price.

Question 8

Karen initially charged $80 for an hour-long massage and averaged 20 clients per week.When she raised her price to $100,the number of massages decreased to 15 per week.What is the price elasticity of demand for her service?

Accepted Answer

The answer of Karen initially charged $80 for an hour-long...

Question 9

In _______________,many firms provide similar products that are considered substitutes for each other.

Accepted Answer

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

Question 10

How is the price elasticity for Crest toothpaste likely to be different from the price elasticity for all toothpastes (a product category)? Why are they likely to be different?

Accepted Answer

The answer of How is the price elasticity for Crest...

Question 11

Rarely is the lowest-price product offering the dominant brand in a given market.

Accepted Answer

A) True 
 B)False

Question 12

What is cross-shopping and what does it mean for marketers' pricing strategy?

Accepted Answer

The answer of What is cross-shopping and what does it...

Question 13

Variable costs,primarily labor and materials,are those costs that vary with

Accepted Answer

A)   seasonal demand.
B)   quality of the product.
C)   automation.
D)   production volume.
E)   all of these.

Question 14

Sales of national brands of orange juice tend to increase when the economy is doing well,while sales of generic orange juice increase when the economy is not doing well.Among industry members this is called the "orange juice indicator." This is an example of how ____________ impacts demand for products.

Accepted Answer

A)   the substitution effect
B)   the price inelasticity coefficient
C)   the income effect
D)   the target return effect
E)   cross-price elasticity

Question 15

Jason rents rooms in his hotel for an average of $100 per night.The variable cost per rented room is $20.His fixed costs are $100,000 and his target profit is $20,000.For Jason,to earn his target profit,he will need to rent out ________ rooms.

Accepted Answer

A)   100
B)   1,500
C)   20,000
D)   1,000
E)   It cannot be determined from the information provided.

Question 16

In addition to the product-specific and firm-specific factors that affect pricing,there are two broader factors: the Internet and sociocultural factors.

Accepted Answer

A) True 
 B)False

Question 17

Managers of Wendy's fast food restaurants keep track of prices at competitors such as McDonald's,Burger King,and Arby's,knowing that a decrease in the prices at these other fast food restaurants will

Accepted Answer

A)   increase the income effect for their products.
B)   increase demand for their products.
C)   decrease the income effect for their products.
D)   increase the complementary effect for their products.
E)   decrease demand for their products.

Question 18

A demand curve is built assuming that

Accepted Answer

A)   income is derived from demand.
B)   price remains the same,and fixed costs change.
C)   everything but price and demand remains the same.
D)   a change in quantity demanded causes a change in price.
E)   the firm does not advertise.

Question 19

A demand curve shows the relationship between income and demand.

Accepted Answer

A) True 
 B)False

Question 20

Tess is the marketing manager for a fast food restaurant chain.She uses a target return pricing strategy because her firm's primary objective is to

Accepted Answer

A)   increase profits.
B)   increase sales.
C)   decrease competition.
D)   build customer satisfaction.
E)   broaden the product line.

Exam 14: Pricing Concepts for Establishing Value

Ryan gave the manager of his convenience store a set of binoculars so she could see the gasoline prices charged by the other convenience store at that intersection.Ryan told the manager to always match the gasoline prices of the other store.Ryan is using a _____________________ pricing strategy.

Price is the cash expenditure plus taxes that consumers have to pay for a good or service.

_________________ measures consumers' sensitivity to price changes.

A customer orientation toward pricing implicitly invokes the concept of

Marketers spend millions of dollars annually trying to create or reinforce brand loyalty.Brand loyalty changes the demand curve for the firm's products by

In a market with _______________,there are many firms providing differentiated products.

Price elasticity of demand is the

Karen initially charged $80 for an hour-long massage and averaged 20 clients per week.When she raised her price to $100,the number of massages decreased to 15 per week.What is the price elasticity of demand for her service?

In _______________,many firms provide similar products that are considered substitutes for each other.

How is the price elasticity for Crest toothpaste likely to be different from the price elasticity for all toothpastes (a product category)? Why are they likely to be different?

Rarely is the lowest-price product offering the dominant brand in a given market.

What is cross-shopping and what does it mean for marketers' pricing strategy?

Variable costs,primarily labor and materials,are those costs that vary with

Jason rents rooms in his hotel for an average of $100 per night.The variable cost per rented room is $20.His fixed costs are $100,000 and his target profit is $20,000.For Jason,to earn his target profit,he will need to rent out ________ rooms.

In addition to the product-specific and firm-specific factors that affect pricing,there are two broader factors: the Internet and sociocultural factors.

Managers of Wendy's fast food restaurants keep track of prices at competitors such as McDonald's,Burger King,and Arby's,knowing that a decrease in the prices at these other fast food restaurants will

A demand curve is built assuming that

A demand curve shows the relationship between income and demand.

Tess is the marketing manager for a fast food restaurant chain.She uses a target return pricing strategy because her firm's primary objective is to