Deck 13: Pricing Products and Services

Question 1

The manufacturer of a Blu-Ray-R, a recordable Blu-Ray disk that can be erased and reused, is thinking of using a skimming pricing strategy for its new product. Which of the following conditions would argue AGAINST using a skimming pricing strategy for the Blu-Ray disks?

A)consumers perceive a price-quality relationship
B)large potential market, even at a high price
C)technological problems still exist for competitors
D)increasing volume reduces production costs substantially

Answer 1

D

Question 2

Market analysts for a large cereal company estimated that price elasticity of demand for pre-sweetened cereal is 1.97, but that the entire market for ready-to-eat cereals exhibits price elasticity of demand of 0.36. Most likely, this information will be collected by managers in which step of the price-setting process?

A)estimating the break-even point
B)identifying pricing constraints and objectives
C)estimating demand and revenue
D)selecting an appropriate (approximate)price level

Answer 2

C

Question 3

Value-pricing is:

A)the practice of simultaneously increasing product or service benefits and maintaining or decreasing price.
B)the practice of simultaneously increasing product and service benefits and increasing price.
C)the ratio of price to perceived benefits.
D)the ratio of perceived benefits to price.

Answer 3

A

Question 4

Target profit pricing is:

A)setting a price based on a specific annual dollar target volume of profit.
B)adding a fixed percentage to the cost of all items in a specific product class.
C)setting the price of a line of products at a number of different price points.
D)setting prices to achieve a profit that is a specified percentage of the sales volume.

Question 5

Many online items, such as games, downloadable software, and services (such as Dropbox), provide basic versions for free, although they have limited features and support. To get 24/7 support and all the features unlocked, the consumer must purchase the item. This strategy is referred to as:

A)sustainable pricing
B)goodwill pricing
C)profit-maximization pricing
D)freemium pricing

Question 6

When Teresa went into the furniture store to buy a new sleeper sofa, she thought the prices quoted by the salesperson were too high, so she prepared to leave. As she neared the door, the salesperson asked if she would be interested in buying the sofa if the price was $150 lower. Teresa returned to the store, purchased the sofa, and felt like she had gotten a good deal. The furniture store uses:

A)customary pricing.
B)a flexible-price policy.
C)price lining.
D)price fixing.

Question 7

How many HDTV units has VIZIO sold since it began in 2002?

A)46 million
B)32 million
C)38 million
D)44 million

Question 8

Which of the following statements about a flexible-price policy is NOT true?

A)A flexible-price policy may be used when selling a house.
B)When using a flexible-price policy, the seller may risk violating the Competition Act.
C)This flexible-price policy may be used when selling a car.
D)Also called dynamic pricing, it gives sellers very little discretion in setting final price.

Question 9

What is the main factor that has led to the fact that consumers may not necessarily view lower priced products as lower priced?

A)less competition has led to higher prices.
B)less competition has led to lower prices.
C)intense competition has led to lower costs
D)lower costs has led to intense competition

Question 10

Which of the following statements about cost-oriented approaches is true?

A)Experience curve pricing is simple to use because costs predictably decrease by 25 percent with each doubling of production.
B)These methods focus on the supply side of the pricing problem and involve considerations of production and marketing expenses.
C)These methods focus on the demand side of the pricing problem and involve stimulating demand and decreasing revenue.
D)Target return on investment is an example of a cost-based method.

Question 11

Ampro-Mag is a small company that makes materials for safely controlling hazardous spills of all kinds. It sells these items as a neutralizing kit priced at $120. The costs of the materials that go into each kit are $45. It costs $5 in labour to assemble a kit. The company has monthly expenses of $1,000 for rent and insurance, $200 for heat and electricity, $500 for advertising in trade journals, and $3,500 for the monthly salary of its owner. What is Ampro-Mag's monthly break-even point in terms of number of neutralizing kits sold?

A)75 neutralizing kits
B)68 neutralizing kits
C)104 neutralizing kits
D)47 neutralizing kits

Question 12

Jane Westerlund owns a picture-framing shop, The Caplow Co. The average price she receives for a picture she frames for a customer is $120. This price must cover her average costs for a typical framed picture of $5 for glass, $2 for matting, and $13 for the frame, and $30 for the labour involved. She must also cover monthly expenses of $1,000 for rent and insurance, $200 for heat and electricity, $500 for advertising, and
$3,500 for her salary. Assuming everything else stays the same, if Jane Westerlund increased the average price charged for a framed picture, in a break-even chart this would cause the slope of the total revenue curve to and the break-even
Quantity to _.

A)decrease; decrease
B)increase; decrease
C)decrease; increase
D)increase; increase

Question 13

Inelastic demand exists when:

A)an increase in price causes a larger increase in quantity demanded and total revenue falls to zero.
B)the quantity demanded remains the same regardless of level of price and total revenue is unchanged.
C)a small percentage decrease in price produces a larger percentage increase in quantity demanded and total revenue increases.
D)a small percentage decrease in price produces a smaller percentage increase in quantity demanded and total revenue falls.

Question 14

For $19.99 a month you can purchase only a paper subscription to the Globe and Mail newspaper. For $9.99 you can purchase only an online subscription. However, for $22.99 you get both. This is an example of:

A)Tie-in pricing
B)Packaged pricing
C)Bundle pricing
D)Multi-product pricing

Question 15

Rather than billing clients by the hour, some lawyers and their clients agree on a fixed fee based on expected costs plus a profit for the law firm. Which pricing method are they using?

A)cost-plus pricing
B)experience curve pricing
C)customary pricing
D)target pricing

Question 16

'No-name' products likely use:

A)below-market pricing
B)prestige pricing
C)demand backward pricing
D)loss-leader pricing

Question 17

Two individuals at a spice market in Marrakesh swap cinnamon in exchange for saffron, where both sides are equally happy with the arrangement. This occurred rather than exchanging:

A)perceptions.
B)money.
C)value.
D)promises.

Question 18

When setting the prices for their smart TVs, VIZIO based its pricing strategy on:

A)Copying Sony's winning strategy
B)Distributing with Costco and Sam's Club warehouses
C)Affordable products with innovative features
D)High-end features, high-end price

Question 19

The marketing director for a(n)is most likely to believe, "The purpose of advertising is to increase demand for the product class."

A)oligopoly
B)pure monopoly
C)pure competitor
D)monopolistic competitor

Question 20

At a price of $3 each, SHAPE magazine sells 1.25 million copies of its magazine targeted to young women seeking a healthier lifestyle. If the price per issue is increased to $3.25 each, only 1 million copies will be sold. For the information provided, the price elasticity of demand for SHAPE magazine in this price range can be described as:

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

Question 21

Bijan's in New York City has offered a five-piece set of crocodile luggage for $55,000. This is an example of pricing.

A)odd-even
B)penetration
C)experience curve
D)prestige

Question 22

Ships Ahoy is a small company that makes model sailboat kits priced at $120 each. (There is no quantity discount.)The cost of the materials that go into each kit is $45. It costs $5 in labour 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 $3,500 for the monthly salary of its owner. Last month the company sold 150 kits. Ships Ahoy's total revenue for the month was:

A)$10,500.
B)$6,750.
C)$18,000.
D)$7,500.

Question 23

Most government crown organizations in Canada operate in which competitive market?

A)Monopolistic competition
B)Pure competition
C)Oligopoly
D)Pure monopoly

Question 24

All of the following would be considered pricing constraints, except

A)human resources
B)newness of the product
C)cost of producing the product
D)demand for the product class

Question 25

Many retailers deliberately sell products below their normal prices (and sometimes below cost)to attract attention and induce additional store traffic. This strategy is referred to as:

A)prestige pricing
B)loss-leader pricing
C)above-market pricing
D)customary pricing

Question 26

A firm's profit equation demonstrates that its profit equals:

A)total cost - marginal cost.
B)total cost + total revenue.
C)total cost - variable cost.
D)total revenue - total cost.

Question 27

Toro decided to augment its traditional hardware outlet distribution by also selling through big discounters such as Walmart and Zellers and set prices for the discounters substantially below those for its traditional hardware outlets. Many unhappy hardware stores subsequently abandoned Toro products in favour of other manufacturers. This is an example of a firm failing to consider effects when setting its final list or quoted price.

A)social responsibility
B)backlash
C)customer
D)company

Question 28

There are over 100 companies that manufacture natural and artificial flavourings used to enhance the taste of food before it is sold to consumers. Many of these manufacturers are regional operations. Many differentiate themselves from the competition by specializing in one or two types of foods for which they provide flavourings. Some use their distribution strategies as a means of differentiating themselves from their competition. This industry is most likely an example of:

A)bilateral monopoly.
B)oligopoly.
C)pure monopoly.
D)monopolistic competition.

Question 29

Often, the earlier a product is in its life cycle:

A)the greater the flexibility to charge a higher price.
B)the lower the price the firm must charge.
C)the more competition it has.
D)the lower the production costs.

Question 30

The Dollar Giant retail store implemented a policy that nothing will be above $1.00, even if they end up selling the item below cost. This strategy is referred to as:

A)targeted store pricing
B)cost-less fixed-fee pricing
C)fixed pricing
D)price lining

Question 31

The assumption that demand is elastic at a number of price points, but is inelastic between these price points leads to which approach to pricing?

A)target pricing
B)penetration pricing
C)price lining
D)skimming pricing

Question 32

If you were to buy five dwarf peach trees from the Stark Bro's fruit trees and landscaping catalogue in five separate orders, you will pay $108.99, but if you order its assortment (1 each of five different dwarf peach trees), you pay $89.99. Stark Bro's uses:

A)standard markup pricing.
B)prestige pricing.
C)bundle pricing.
D)price lining.

Question 33

The fashion buyer for Neiman Marcus is in Italy to view the new collections and to order for the coming season. In Milan, she negotiates a good price for a quantity of shoes in a range of sizes and styles at FOB factory. This means that:

A)the factory pays freight to the U.S., Neiman Marcus pays freight within the U.S.
B)the factory selects the mode of transportation, pays freight charges, and is responsible for any damage because the seller retains title to the goods until they are delivered to Neiman Marcus.
C)Neiman Marcus and the factory split freight costs.
D)Neiman Marcus selects the mode of transportation, pays freight charges, and is responsible for any damage while the shoes are in transit because title passed to the buyer at the point of loading.

Question 34

Which of the following statements about pricing objectives is true?

A)Target return is a type of market share objective.
B)A firm that forgoes higher profits and wants to satisfy its obligations to its customers and society in general is pursuing a social responsibility objective.
C)Unit volume is not a type of pricing objective because it is a production strategy.
D)Market share and unit volume are synonymous.

Question 35

A new startup was thinking of offering fruits and vegetables directly from 'farm to front door' for all residents in British Columbia. In order to understand what individuals were interested in purchasing, how much they would purchase, and at what price, they conducted a mail-out survey to all residents. They plotted the information they received on a demand curve. This showed management at the startup anticipated:

A)the total number of buyers for all products in a particular industry.
B)a maximum number of products consumers will buy at a given price.
C)the total sales for specified product lines, usually over a three-year-period.
D)marginal revenue obtained under specified customer demand conditions.

Question 36

Which of the following statements about penetration pricing is true?

A)Penetration pricing is a cost-based pricing method.
B)Penetration pricing encourages competitors to enter a market.
C)A penetration pricing strategy is more effective in a marketplace with price-sensitive consumers.
D)Penetration pricing is a profit-oriented approach to pricing.

Question 37

Jane Westerlund owns a picture-framing shop, The Caplow Co. The average price she receives for a picture she frames for a customer is $120. This price must cover her average costs for a typical framed picture of $5 for glass, $2 for matting, and $13 for the frame, and $30 for the labour involved. She must also cover monthly expenses of $1,000 for rent and insurance, $200 for heat and electricity, $500 for advertising, and
$3,500 for her salary. Assuming everything else stays the same, if Westerlund wants to increase her monthly salary to $4,000, this would cause the slope of the total cost curve to ________ and the break-even quantity to _.

A)increase; increase
B)decrease; stay the same
C)stay the same; increase
D)decrease; increase

Question 38

Bob Biltmore owns dozens of very successful print shops throughout the Prairie Provinces. Biltmore's shops specialize in low-cost black and white copies and feature user-friendly machines consumers can easily operate. In recent months, Biltmore has noticed many more competitors in the areas where his stores are located. In an attempt to eliminate the competition, Biltmore has decided to charge a very low price for his black and white copies, a price so low his competitors will be forced out of business. After the competition has been driven out, Biltmore plans to raise the price of his copies. Biltmore is planning to engage in the illegal practice of:

A)price inflation.
B)competitive pricing.
C)predatory pricing.
D)price fixing.

Question 39

The pricing model in the text has six distinct steps in the pricing process. Setting a list price of $129.99 for a new printer would be completed in which step?

A)Step 4 in the pricing process
B)Step 3 in the pricing process
C)Step 5 in the pricing process
D)Step 6 in the pricing process

Question 40

An established provider of high-definition television service does not like the new startup that has decided to offer HD television in the same market area. As such, the established provider lowers their prices to half of what the new startup is charging, in hopes of forcing them into bankruptcy. This activity is known as:

A)Price discrimination
B)Deceptive pricing
C)Price fixing
D)Predatory pricing

Question 41

The competitive situation of many national, regional, and private label brands of peanut butter is likely one of a(n):

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

Question 42

Price elasticity of demand is determined by a number of factors. Which of the following is NOT one of those factors?

A)Type of good (necessity or luxury).
B)The availability of substitutes.
C)Importance of purchase relative to a person's disposable income.
D)The cost of production.

Question 43

The theory behind freemium pricing is that:

A)this model is great for companies that do not want to make money
B)it is illegal and unethical
C)customers perceive value in the free service and then are more willing to pay
D)customers are "guilted" into purchasing

Question 44

The manager of a small gasoline station observes that while gasoline sales have been steady, the service side of the business has fallen off, and mechanics are often idle. He decides to offer a promotion - an oil change for $10 with a coupon mailed to 800 households in a 2-mile radius from his station. The $10 will just cover the costs of the oil change, and the cost of printing and mailing is $1,000. He hopes the promotion will increase regular maintenance service calls, which averages to $40. (Materials and labour per job cost $30.)If two hundred customers used the coupon, what will be the total cost of the promotion? (Disregard any opportunity costs.)

A)$1200
B)$800
C)$200
D)$1000

Question 45

When GM purchases 500 tonnes of sheet metal for their manufacturing line, the cost is $0.10 per tonne. However, when they purchase 750 tonnes, the price becomes $0.05 per tonne. GM is receiving a(n)from the sheet metal manufacturer.

A)penetration prices
B)promotional allowances
C)quantity discounts
D)one-price policy prices

Question 46

The practice of exchanging goods and services for other goods and services rather than for money is called:

A)pricing substitution.
B)value-pricing.
C)debt restructuring.
D)barter.

Question 47

Loss-leader pricing is:

A)deliberately selling a product below its customary price to attract attention to it.
B)setting the same price for similar customers who buy the same product and quantities under the same conditions.
C)a pricing method where the price the seller quotes includes all transportation costs.
D)a method of pricing based on a product's tradition, standardized channels of distribution, or other competitive factors.

Question 48

Katherine was shopping for a new pair of sunglasses. While in The Bay department store in the shopping center, Katherine visited the optical department. Here she found a pair of Oakley brand sunglasses that she considered very attractive. However, the price of $225 was more than she expected to pay for sunglasses and asked the salesperson why the glasses carried such a high price tag. The salesperson informed Katherine that the $225 ensured her of the finest quality glasses featuring ultra-strong titanium frames and specially formulated lenses, which would protect Katherine from all harmful UV and blue light. Finally, the lenses would offer optimum optical clarity, and the glasses would "look great" on Katherine. The salesperson was attempting to help Katherine realize the value offered by the Oakley glasses by:

A)creating a price/cost/benefit equation.
B)comparing the features of the glasses to those of other glasses.
C)creating a value analysis for Katherine.
D)comparing the ratio of perceived benefits to the price of the glasses.

Question 49

Southern gardeners have a preconceived idea on what they will pay for pine bark mulch that they buy at their local gardening supply store to keep the weeds down in their gardens. If the price being charged is not within a narrow range that they feel is appropriate, they will make substitutions-newspaper, grass clippings, or some other kind of ground covering. When pricing pine bark mulch, a garden supply retailer should use:

A)above-, at-, or below market pricing.
B)?customary pricing.
C)loss-leader pricing.
D)penetration pricing.

Question 50

Leupold & Stevens, Inc., makes Leupold scopes for rifles and has introduced a new scope that has the quality and performance for which Leupold & Stevens is famous, at a price much lower than it has ever sold a rifle scope before. The new scope offers several different magnifications and is the only scope in the $200 range that is made in Canada. Which pricing strategy is Leupold & Stevens using to appeal to a larger market?

A)skimming pricing
B)penetration pricing
C)odd-even pricing
D)price lining

Question 51

Each of the following is a true statement with respect to acting as a constraint on pricing EXCEPT:

A)The competitive environment is an oligopoly.
B)We are dealing with a necessity type of good.
C)The product is in the maturity stage of its product life cycle.
D)Only factors external to the organization are valid factors.

Question 52

You have been asked to calculate the break-even point for a new line of shirts. The selling price will be $35 per shirt. The labour costs will be $5 per shirt. The administrative costs of operating the company are estimated to be $60,000 annually and the sales and marketing expenses are $20,000 a year. Additionally, the cost of materials will be $10 per shirt. What is the break-even quantity?

A)1,715 shirts
B)4,000 shirts
C)2,286 shirts
D)3,000 shirts

Question 53

Which of the following statements about price elasticity of demand is true?

A)The more substitutes a product has, the less likely it is to be price elastic.
B)Price elasticity with unitary demand is less than 1.
C)With inelastic demand, a reduction in price increases total revenue.
D)With inelastic demand, price elasticity is less than 1.

Question 54

Vending machines are a good example of what type of competition-based pricing?

A)above-, at-, or below-market pricing
B)?penetration pricing
C)loss-leader pricing
D)customary pricing

Question 55

Which product is likely to experience skimming pricing?

A)an online file-sharing service like Dropbox
B)access to Netflix
C)new Apple iPhone
D)running shoes by Nike

Question 56

One problem in the interstate trucking industry is the number of trucks that return after making a delivery with an empty truck. There is a website where independent interstate truckers can look for loads that they can carry with them on their return trip. Because the trucks would be returning empty (and inefficiently), truckers, who use this website to get business that they would not have had without it, give a reduced shipping rate. This reduced rate is an example of:

A)cost-plus pricing.
B)target pricing.
C)yield management pricing.
D)penetration pricing.

Question 57

The cash payment or extra amount of "free goods" awarded to sellers in the channel of distribution for undertaking certain advertising or selling activities to promote the product is a:

A)flexible pricing policy.
B)quantity discount.
C)promotional allowance.
D)payoff.

Question 58

Gerber supplies a specially formulated product free of charge to children who cannot tolerate foods based on cow's milk. This is a pricing objective.

A)unit volume
B)social responsibility
C)marginal profit
D)target return

Question 59

When purchasing which one of the following products would you be likely to receive a seasonal discount?

A)bricks for home construction
B)a mystery novel
C)an engraved silver picture frame
D)a ream of computer printer paper

Question 60

Go to any Dominion supermarket and walk to the cereal aisle. You will notice four brands - Kellogg's, Quaker, General Mills, and Post-seem to occupy most of the shelf space. These cereals are all priced about the same. There is a good deal of product differentiation as the result of licensing agreements that have created a line of Disney cereals and through the use of different health claims. Given this information, you should know the cereal industry is an example of:

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

Question 61

Predatory pricing is:

A)the practice of charging a very low price for a product with the intent of driving competitors out of business.
B)a conspiracy among firms to set prices for a product or service.
C)the practice of charging different prices to different buyers for goods of like grade and quality.
D)an arrangement a manufacturer makes with a reseller to handle only its products and not those of a competitor.

Question 62

The total money received from the sale of a product is called:

A)total revenue.
B)marginal revenue.
C)total profit.
D)average revenue.

Question 63

An ad campaign by Suave shampoo asked television viewers to identify the hair that was shampooed and conditioned with Suave products and the hair on which expensive salon hair-care products were used. The idea of the ad was that a person could not tell by looking that a woman was using the much cheaper Suave brand. By making price its selling point, Suave is most likely using:

A)demand backward pricing.
B)loss-leader pricing.
C)below-market pricing.
D)prestige pricing.

Question 64

When Sherman bought gas, he noticed the convenience store offered him a 3 percent reduction in price if he paid cash rather than used his credit card. The convenience store was offering him a:

A)cash discount.
B)rebate.
C)trade discount.
D)promotional allowance.

Question 65

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

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

Question 66

You are president of a manufacturing unit of small electronic appliances. You want to reduce your break-even quantity. Other things equal, you can do this by:

A)reducing marginal revenue.
B)increasing fixed cost.
C)increasing the quantity sold, while keeping price unchanged.
D)reducing unit variable cost.

Question 67

A car manufacturer launches a 2014 version of their newest vehicle and has internally stated that each car will have a profit margin of 25%. Manufacturing and marketing need to know this number so they can plan accordingly. The stated profit margin of 25% is an example of a(n):

A)pricing objectives.
B)a pricing plan.
C)a business mission.
D)pricing constraints.

Question 68

The pricing model in the text has six distinct steps in the pricing process. In which step would you be reviewing the following approaches: demand-oriented, cost-oriented, profit-oriented, and competition-oriented?

A)Step 1 in the pricing process
B)Step 2 in the pricing process
C)Step 3 in the pricing process
D)Step 4 in the pricing process

Question 69

Everyday low pricing (EDLP)is the practice of replacing with lower manufacturer list prices.

A)discounts
B)trade discounts
C)promotional allowances
D)trade allowances

Question 70

Different brands within a company's product line generally have different profit margins; higher price lines have higher profit margins. For example, Nike Variety tennis shoes have variable costs of $6 and sell for $24; whereas, Nike Wimbledon tennis shoes have variable costs of $10 and sell for $48. It must be true that:

A)Nike is using a cost-plus percentage-of-cost pricing strategy.
B)demand is unrelated to product quality.
C)Nike is using a price lining strategy.
D)demand is unrelated to price.

Question 71

At a local coffee shop, where you frequent, you are enrolled in their frequent-buyer program, where, for every ten coffees you purchase, you get one for free. Essentially, the coffee shop is engaged in offering a(n):

A)cash discount
B)promotional allowance
C)quantity discount
D)functional discount

Question 72

If you buy one pair of Uvex Clear UVExtreme safety eyewear, the cost is $7.40, but if you buy ten at one time, the price per pair is reduced to $6.85. This is an example of a:

A)promotional allowance.
B)bundle pricing.
C)quantity discount.
D)cumulative quantity discount.

Question 73

When Panera Bread opened Panera Cares Cafe, they implemented a pricing model that allowed consumers to pay what they wished for their items. This pricing model is referred to as:

A)profit maximizing
B)self-sustaining
C)name your price
D)profit minimizing

Question 74

Trade (functional)discounts are calculated on two criteria. What are the two criteria?

A)Where the reseller is in the channel; the marketing activities the reseller performs in the future.
B)When the reseller joins the channel; the marketing activities the reseller performs in the future.
C)When the reseller joins the channel; the marketing activities the reseller performs immediately.
D)Discounts based on paying cash; the marketing activities the reseller performs.

Question 75

The pricing model in your text, has six distinct steps in the pricing process. Considering the following list of steps in setting prices: identify pricing objectives and constraints; estimate demand and revenue; determine cost, volume, and profit relationships; select an approximate price level; set the list or quoted price; and ________.

A)scan competitors for price lines of similar products or services
B)select the appropriate pricing formula
C)test market the product or service to check for elasticity of demand
D)make special adjustments to the list or quoted price

Question 76

The Precision Writing Instruments Company makes two pen designs - the Cordova design and the Savannah design. These data apply, regardless of which of two pen designs is being implemented. Materials cost per pen is $6. Labour cost per pen is $5. Production overhead is $1,000,000. Advertising and promotion is $1,000,000. Marketing research has estimated the following demand functions for the next year of sales for the two pen designs where Q represents demand in thousands and P represents price. For the Cordova design, Q = 150 - 2.5P. For the Savannah design, Q = 175 - 2.1P. A penetration strategy is proposed for the Savannah design and a price of
$25 is selected. What will be the profit or loss for the first year?

A)$306,250 loss
B)$2,112,500 profit
C)$2,222,500 profit
D)$285,000 loss

Question 77

A new special on this week at your local dress shop is a 2 for 1 dress special with free tailoring. Last week, it was regular pricing on everything and tailoring was being charged $25.00 a dress. The marketers at this dress shop are engaging in:

A)revenue sharing
B)value-pricing
C)quantitative analysis
D)diminishing returns

Question 78

Suppose a shop owner sets a target ROI of 10 percent, which is twice that achieved the previous year. She considers raising the average price of a framed picture to $54 or $58-up from last year's average of $50. In order to still achieve her target, she might:

A)add value to the framed picture that adds minimal fixed and variable costs, yet consumers are willing to accept
B)use noticeable cheaper quality materials to lower her costs
C)mislabel her price of goods in her income statement to reflect the targeted ROI
D)include bundle pricing to encourage consumers to purchase extra items

Question 79

Which of the following would be an example of a variable cost for a publication like SHAPE magazine that is targeted to young women seeking a healthier lifestyle?

A)paper and ink
B)increase in women in targeted demographics
C)rent for parking deck used by employees
D)salary of publisher

Question 80

The competitive market situation in which the few sellers are sensitive to one another's prices is called:

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