Question 1

Charging a relatively high price for new and innovative products to those consumers most willing and able to pay the high price is called price

Accepted Answer

A)  penetration. 
B)  bundling. 
C)  fixing. 
D)  referencing. 
E)  skimming.

Question 2

The Clayton Act and the Robinson-Patman Act forbid certain types of

Accepted Answer

A)  price discrimination. 
B)  bait-and-switch pricing. 
C)  predatory pricing. 
D)  everyday low pricing strategies. 
E)  loss leader pricing.

Question 3

Why do marketers of new and innovative products often start out with a price skimming strategy rather than a penetration strategy?

Accepted Answer

The answer of Why do marketers of new and innovative...

Question 4

When Sony released its PlayStation 3 game machines,it charged a high price,attracting the most avid game players.This was a market penetration pricing strategy.

Accepted Answer

A) True 
 B)False

Question 5

If the fixed costs of manufacturing a new cell phone are $10,000,the sales price is $60,and variable cost per unit is $20,the break-even point is

Accepted Answer

A)  100 units. 
B)  4,000 units. 
C)  20 units. 
D)  1,000 units. 
E)  250 units.

Question 6

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 7

Bernard's firm has set corporate direction to become one of the leaders in each of its significant market segments.It was Bernard's job to examine the firm's pricing strategy to determine how to maximize market share,even at the expense of profits in the short run.What kind of company objective would guide Bernard's effort?

Accepted Answer

A)  industry-oriented 
B)  sales-oriented 
C)  competitor-oriented 
D)  innovation-oriented 
E)  customer-oriented

Question 8

Brandon is conducting an experiment by charging different prices for the same products at different stores and measuring sales.With this information,he will construct a demand curve.How can Brandon use this information?

Accepted Answer

The answer of Brandon is conducting an experiment by charging...

Question 9

Which of the following is most likely to be characterized by pure competition in the United States?

Accepted Answer

A)  soybeans 
B)  cereal 
C)  soft drinks 
D)  computer operating systems 
E)  fast-food restaurants

Question 10

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 Wendy's products. 
B)  increase demand for Wendy's products. 
C)  decrease the income effect for Wendy's products. 
D)  increase the complementary effect for Wendy's products. 
E)  decrease demand for Wendy's products.

Question 11

If a 1 percent decrease in price results in less than a 1 percent increase in the quantity demanded,demand is

Accepted Answer

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

Question 12

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

Accepted Answer

A) True 
 B)False

Question 13

Julia wants her firm's gourmet snacks to be the leading brand in the U.S.market.When adopting a pricing strategy designed to gain market share,she should remember that

Accepted Answer

A)  rarely is the lowest-price offering the dominant brand in a market. 
B)  prestige products need to be competitively priced. 
C)  companies can gain market share by offering low-quality products at a high price. 
D)  total value equals total cost minus variable costs leading to price escalation. 
E)  price wars are the way to become the dominant brand.

Question 14

Dynamic pricing is also referred to as individualized pricing.

Accepted Answer

A) True 
 B)False

Question 15

Barry customizes Harley-Davidson motorcycles.No two cycles are alike.He notices that very few customers even ask the price of his motorcycles before they decide to purchase them.Demand for his motorcycles is probably

Accepted Answer

A)  price sensitive. 
B)  price elastic. 
C)  price inelastic. 
D)  income elastic. 
E)  cross-price elastic.

Question 16

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

Accepted Answer

A) True 
 B)False

Question 17

In developing marketing strategies,why is price often the most challenging of the four Ps to manage?

Accepted Answer

A)  because most managers feel it is the least important element of the marketing mix 
B)  because it is the least understood element of the marketing mix 
C)  because it has to be based on the promotion budget for the product 
D)  because it is difficult to calculate markups for products 
E)  because managers don't understand the relationship between benefits and costs

Question 18

Small-business consultants are constantly admonishing would-be entrepreneurs,"Beware of the overhead." Using an overhead of $100,000 and then an overhead of $200,000,with a contribution per unit of $50,determine the break-even points.

Accepted Answer

The answer of Small-business consultants are constantly admonishing would-be entrepreneurs,"Beware...

Question 19

Jacob rents rooms in his hotel for an average of $100 per night.The variable cost per rented room is $20,to cover maid service and utilities.His fixed costs are $100,000 and his profit last year was $20,000.For Jacob,the contribution per unit is

Accepted Answer

A)  $100. 
B)  $80. 
C)  $800. 
D)  $1,000. 
E)  It cannot be determined from the information provided.

Question 20

When a firm sets its pricing strategy based on how it can add value to its products or services it has embraced a(n)_______ orientation to pricing.

Accepted Answer

A)  industry 
B)  sales 
C)  competitor 
D)  production 
E)  customer

Exam 14: Pricing Concepts for Establishing Value

Charging a relatively high price for new and innovative products to those consumers most willing and able to pay the high price is called price

The Clayton Act and the Robinson-Patman Act forbid certain types of

Why do marketers of new and innovative products often start out with a price skimming strategy rather than a penetration strategy?

When Sony released its PlayStation 3 game machines,it charged a high price,attracting the most avid game players.This was a market penetration pricing strategy.

If the fixed costs of manufacturing a new cell phone are $10,000,the sales price is $60,and variable cost per unit is $20,the break-even point is

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?

Brandon is conducting an experiment by charging different prices for the same products at different stores and measuring sales.With this information,he will construct a demand curve.How can Brandon use this information?

Which of the following is most likely to be characterized by pure competition in the United States?

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

If a 1 percent decrease in price results in less than a 1 percent increase in the quantity demanded,demand is

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

Julia wants her firm's gourmet snacks to be the leading brand in the U.S.market.When adopting a pricing strategy designed to gain market share,she should remember that

Dynamic pricing is also referred to as individualized pricing.

Barry customizes Harley-Davidson motorcycles.No two cycles are alike.He notices that very few customers even ask the price of his motorcycles before they decide to purchase them.Demand for his motorcycles is probably

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

In developing marketing strategies,why is price often the most challenging of the four Ps to manage?

Small-business consultants are constantly admonishing would-be entrepreneurs,"Beware of the overhead." Using an overhead of $100,000 and then an overhead of $200,000,with a contribution per unit of $50,determine the break-even points.

Jacob rents rooms in his hotel for an average of $100 per night.The variable cost per rented room is $20,to cover maid service and utilities.His fixed costs are $100,000 and his profit last year was $20,000.For Jacob,the contribution per unit is

When a firm sets its pricing strategy based on how it can add value to its products or services it has embraced a(n) _______ orientation to pricing.