Question 1

practice of exchanging products and services for other products and services rather than for money is referred to as __________.

Accepted Answer

A)  barter 
B)  reciprocal pricing 
C)  virtual pricing 
D)  balance of payments 
E)  value-pricing

Question 2

a price of $2.00 each,SHAPE magazine sells 1 million copies of its magazine targeted to young women seeking a healthier lifestyle.If the price per issue is increased to $2.50,only 800,000 copies would be sold.From the information provided here,the price elasticity of demand for SHAPE magazine in this price range can be described as

Accepted Answer

A)  inelastic demand. 
B)  elastic demand. 
C)  unitary demand. 
D)  null elasticity. 
E)  subsidized elasticity.

Question 3

Three different objectives relate to a firm's profit,which have different implications for pricing strategy.The three profit-oriented objectives include __________,maximizing current profit,and achieving a target return.

Accepted Answer

A)  accumulating profits 
B)  managing for long-run profits 
C)  reinvesting profits 
D)  redistributing profits 
E)  maximizing gross margin

Question 4

Creative marketers engage in value-pricing,which is the practice of simultaneously __________and maintaining or decreasing price.

Accepted Answer

A)  decreasing product and service benefits 
B)  increasing product and service benefits 
C)  decreasing profit 
D)  analyzing benefits 
E)  decreasing cost

Question 5

manufacturer of a new kind of fat-free ice cream that has the consistency and taste of regular ice cream is thinking of using a penetration pricing strategy for its new product.Which of the following conditions would argue against using a penetration pricing strategy for the tasty fat-free ice cream?

Accepted Answer

A)  The ice cream market is highly elastic. 
B)  A large portion of the market has inelastic demand for ice cream-over a fairly broad range of prices. 
C)  Economies of scale in production would be substantial. 
D)  Retailers are not willing to pay for new brands of premium ice cream in the already overcrowded category. 
E)  Once the initial price is set, it is nearly impossible to lower the price without alienating early buyers.

Question 6

Economists have identified four types of competitive markets: pure monopoly,monopolistic competition,pure competition,and __________.

Accepted Answer

A)  capitalism 
B)  socialism 
C)  consumer-dominated 
D)  oligopoly 
E)  government-dominated

Question 7

Companies often pursue a market share objective when __________.

Accepted Answer

A)  industry sales are flat or declining 
B)  profits are increasing 
C)  industry sales are beginning to rise 
D)  there is a sudden increase in production costs 
E)  stockholders are seeking higher dividends

Question 8

Figure 13-4
-Figure 13-4 above,column "D" represents which type of competitive market?

Accepted Answer

A)  pure monopoly 
B)  oligopoly 
C)  monopolistic competition 
D)  pure competition 
E)  monopolistic oligopoly

Question 9

Rents,executive salaries,and insurance are typical examples of

Accepted Answer

A)  variable costs. 
B)  fixed costs. 
C)  unit costs. 
D)  marginal costs. 
E)  total costs.

Question 10

estimating demand,price is not the only factor to be considered.Three other elements include consumer tastes,price and availability of similar products,and

Accepted Answer

A)  consumer income. 
B)  consumer psychographics. 
C)  current economic stressors. 
D)  current political agendas. 
E)  green substitutes.

Question 11

manufacturing company that introduces a product must know or anticipate what specific price its __________ currently charge or may charge in the future.

Accepted Answer

A)  present and potential competitors 
B)  financial institutions 
C)  suppliers 
D)  unions 
E)  regulators

Question 12

Three different objectives relate to a firm's profit,which have different implications for pricing strategy.The three profit-oriented objectives include managing for long-run profits,maximizing current profit objectives,and __________.

Accepted Answer

A)  accumulating profits 
B)  reinvesting profits 
C)  redistributing profits 
D)  maximizing gross margin 
E)  achieving a target return

Question 13

are the six major steps involved in setting prices?

Accepted Answer

The answer of are the six major steps involved in...

Question 14

competitive market circumstances are such that there is no price competition,no product differentiation,and the purpose of advertising is to increase demand for the product class,then __________ must exist in the industry.

Accepted Answer

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

Question 15

Which of the following statements regarding the seller's price is most accurate?

Accepted Answer

A)  Internet price changes are regulated by the Internet Fair Practices Act to protect consumers against price gouging. 
B)  The seller's price is constrained by the type of market within which it competes. 
C)  Price changes cannot be regulated in a monopoly. 
D)  The type of market has little or no impact on a firm in a monopolistic competitive environment. 
E)  Competitive environments should affect a firm's pricing objectives, but not its actual product prices.

Question 16

consumers realize that the quality of diamonds varies,and most believe the higher the price of a diamond,the higher its quality.This is an example of price influencing the perception of overall quality,and therefore __________,to consumers.

Accepted Answer

A)  acceptable cost 
B)  perceptual investment 
C)  barter potential 
D)  return on investment 
E)  value

Question 17

Forever Quilting is a small company that makes quilting kits priced at $120 each.There is no quantity discount.The costs of the materials that go into each kit are $45.It costs $5 in labor to assemble a kit.The company has monthly expenses of $1,000 for rent and insurance,$200 for heat and electricity,$500 for advertising,and $4,500 for the monthly salary of its owner.Last month the company sold 150 kits.Forever Quilting's total revenue for the month was

Accepted Answer

A)  $4,300. 
B)  $6,200. 
C)  $7,500. 
D)  $10,500. 
E)  $18,000.

Question 18

Price elasticity of demand is determined by a number of factors,such as the availability of substitutes,the necessity of the product or service,the cash outlay of purchase relative to a person's disposable income,and

Accepted Answer

A)  whether the item is a luxury product or service. 
B)  the stage of the product or service in its product life cycle. 
C)  the degree of carrying costs for the manufacturer or distributor. 
D)  the financial resources of the organization itself. 
E)  the ability of the organization to meet sudden increases in demand.

Question 19

Figure 13-12
-Figure 13-12 above,"A" identifies a

Accepted Answer

A)  cost point. 
B)  price point. 
C)  value point. 
D)  sensitivity point. 
E)  break-even point.

Question 20

Shoe Company sells heel replacement kits for men's shoes.It has fixed costs of $6 million and unit variable costs of $5 per pair.Suppose a consultant tells Ace it can sell 750,000 heel repair kits,what price must it charge to achieve a profit of $2.5 million?

Accepted Answer

A)  $5.00 
B)  $8.33 
C)  $11.33 
D)  $16.33 
E)  $20.00

Exam 13: Building the Price Foundation