Question 1

Because there are many firms in monopolistic competition markets,

Accepted Answer

A)  everyone is a price taker. 
B)  producers do not have to consider the reactions of rival firms. 
C)  government often encourages consolidation to reduce the number of competitors. 
D)  price controls may be implemented. 
E)  the many competitors will focus on product differentiation.

Question 2

Customers must see value in a product or service before they are willing to exchange time or money to obtain it,but not all customers see the same value in a product.To analyze how many units will be sold at any given price point,marketers draw on

Accepted Answer

A)  a demand curve. 
B)  the law of averages. 
C)  multiple regression analyses. 
D)  target return strategies. 
E)  a sales orientation.

Question 3

Dan is especially price sensitive.He has been known to line up on "Black Friday" (the day after Thanksgiving)at 4 a.m.to be among the first to buy sale items.Dan would likely respond to a(n)_______ pricing strategy.

Accepted Answer

A)  high / low 
B)  premium 
C)  price skimming 
D)  slotting 
E)  uniform

Question 4

Firm A has set very low prices for its products in an attempt to drive its competitor,Firm B,out of business.This is known as monopolistic pricing.

Accepted Answer

A) True 
 B)False

Question 5

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 6

A demand curve shows the relationship between income and demand.

Accepted Answer

A) True 
 B)False

Question 7

A reference price is

Accepted Answer

A)  the total price including tax. 
B)  the price against which buyers compare the actual selling price. 
C)  the manufacturer's cost. 
D)  a cumulative quantity discount price. 
E)  the external horizontal fixed price.

Question 8

A demand curve shows the relationship between _______ in a period of time.

Accepted Answer

A)  income and demand 
B)  price and costs 
C)  price and elasticity 
D)  profit and price 
E)  price and demand

Question 9

Cross-price elasticity is the

Accepted Answer

A)  percentage change in quantity of a product demanded divided by the percentage change in its price. 
B)  percentage change in quantity demanded of product A compared to the percentage change in price of product B. 
C)  change in price of product A divided by change in quantity demanded for product B. 
D)  change in quantity of a product demanded divided by the change in its price. 
E)  change in quantity of a product demanded divided by the change in its elasticity.

Question 10

Sharon knew that her established customers liked her product much better than her competitor's.She was planning to expand into new markets,and she was considering pricing.She was leaning toward charging a higher price than competitors to help demonstrate that hers was a high-quality product.Sharon was considering

Accepted Answer

A)  a top of market strategy. 
B)  the value of quality. 
C)  advantageous pricing. 
D)  premium pricing. 
E)  differential pricing.

Question 11

A _______ strategy involves accurately measuring all the factors needed to predict sales and profits at various price levels,so that the price level that produces the highest return can be chosen.

Accepted Answer

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

Question 12

When the major league baseball season opens in April,teams that are located in the Midwest and Northeast are still experiencing cold and rainy weather.This often results in fewer fans attending these April games.What can these ball clubs do to maximize their revenue during this time period?

Accepted Answer

The answer of When the major league baseball season opens...

Question 13

Gray markets can be a challenge to marketers because

Accepted Answer

A)  they are just as illegal as black markets. 
B)  they may tarnish the manufacturer's image. 
C)  they are legal in some states and illegal in others. 
D)  consumers are against them,but retailers support them. 
E)  they may result in price increases across the board.

Question 14

Break-even analysis is useful because it allows managers to

Accepted Answer

A)  quantify the relationship between price elasticity and product elasticity. 
B)  reposition products based on their break-even positioning revenue. 
C)  estimate the quantity they will need to sell at a given price to break even. 
D)  determine the relationship between price and quantity demanded. 
E)  analyze the different elements contributing to their variable costs.

Question 15

What makes a high / low pricing strategy appealing to sellers?

Accepted Answer

A)  It attracts two distinct market segments. 
B)  It allows the seller to market itself as an "everyday low price leader." 
C)  It doesn't require the seller to continually offer sales or deep discounts. 
D)  It allows sellers to capture the most profit from a new product or service. 
E)  It reduces the need for slotting and advertising allowances.

Question 16

Because there are many firms with similar products in purely competitive markets,

Accepted Answer

A)  price is determined by the laws of supply and demand. 
B)  consumers develop personal preferences. 
C)  firms find it easy to build strong,distinct brands. 
D)  advertising is heavily used. 
E)  the many competitors will focus on variable cost pricing.

Question 17

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 18

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 19

Diana owns a boutique specializing in ball gowns.Sales are stable and Diana feels it is time she had a 20 percent increase in her salary.If Diana takes this increase in compensation,it will decrease the break-even quantity of gowns she needs to sell on a monthly basis.

Accepted Answer

A) True 
 B)False

Question 20

Suppose that a friend asks you to drive him to the airport this weekend so he can catch a flight.He pays you for the gas used driving to the airport and for the cost of parking the car at the airport while you help him in with his bags.He then declares that you are now "even," since he has fully compensated you for any costs you incurred in helping him get to his flight.From your perspective,what aspects of the "price" of taking your friend to the airport has he omitted?

Accepted Answer

The answer of Suppose that a friend asks you to...

Exam 14: Pricing Concepts for Establishing Value

Because there are many firms in monopolistic competition markets,

Customers must see value in a product or service before they are willing to exchange time or money to obtain it,but not all customers see the same value in a product.To analyze how many units will be sold at any given price point,marketers draw on

Dan is especially price sensitive.He has been known to line up on "Black Friday" (the day after Thanksgiving) at 4 a.m.to be among the first to buy sale items.Dan would likely respond to a(n) _______ pricing strategy.

Firm A has set very low prices for its products in an attempt to drive its competitor,Firm B,out of business.This is known as monopolistic pricing.

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.

A demand curve shows the relationship between income and demand.

A reference price is

A demand curve shows the relationship between _______ in a period of time.

Cross-price elasticity is the

A _______ strategy involves accurately measuring all the factors needed to predict sales and profits at various price levels,so that the price level that produces the highest return can be chosen.

When the major league baseball season opens in April,teams that are located in the Midwest and Northeast are still experiencing cold and rainy weather.This often results in fewer fans attending these April games.What can these ball clubs do to maximize their revenue during this time period?

Gray markets can be a challenge to marketers because

Break-even analysis is useful because it allows managers to

What makes a high / low pricing strategy appealing to sellers?

Because there are many firms with similar products in purely competitive markets,

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

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?

Diana owns a boutique specializing in ball gowns.Sales are stable and Diana feels it is time she had a 20 percent increase in her salary.If Diana takes this increase in compensation,it will decrease the break-even quantity of gowns she needs to sell on a monthly basis.