Deck 13: Building the Price Foundation

Question 1

The money or other considerations (including other products and services)exchanged for the ownership or use of a product or service is referred to as __________.

A)a fee
B)value
C)renumeration
D)price
E)an exchange rate

Answer 1

D

Question 2

According to the price equation,final price equals __________ minus incentives and allowances plus extra fees.

A)salaries
B)list price
C)profits
D)trade-ins
E)taxes

Answer 2

B

Question 3

Barter is the practice of exchanging products and services for other products and services rather than for __________.

A)value
B)ideas
C)promises
D)tariffs
E)money

Answer 3

E

Question 4

Susan O'Rourke hired an attorney to represent her in a court case involving an auto accident.The attorney charged O'Rourke a $2,000 retainer fee for his services.Terry Thomas needed a haircut-the local stylist charged him $12 for her services.Aaron Mathison mowed his neighbor's lawn;in exchange,the neighbor roto-tilled Mathison's garden.The attorney fees paid by O'Rourke,the $12 charged by the hair stylist,and the exchange of lawn mowing for garden tilling are all examples of

A)premiums.
B)barter.
C)the profit motive.
D)price.
E)outlays.

Question 5

From a marketing viewpoint,__________ is the money or other considerations (including other products and services)exchanged for the ownership or use of a product or service.

A)value
B)price
C)barter
D)currency
E)a tariff

Question 6

According to the price equation,a product's or service's final price equals its list price minus incentives and allowances plus

A)profits.
B)commissions.
C)trade-ins.
D)extra fees.
E)taxes.

Question 7

According to the price equation,final price equals list price minus __________ plus extra fees.

A)profits
B)commissions
C)trade-ins
D)taxes
E)incentives and allowances

Question 8

The use of "special fees" and "surcharges" is driven by consumers' zeal for low prices and __________.

A)the ease of making price comparisons on the Internet
B)value,the idea of getting "more" for their money
C)the need for extra accessories
D)avoiding state sales taxes from Internet purchases
E)a dislike of price haggling or negotiating

Question 9

Barter refers to

A)a reciprocity agreement stipulating that if company "A" purchases services from company "B," then company "B" must purchase similar services from company "A."
B)a tying agreement stipulating that if company "A" purchases a product from company "B," it must also purchase one of its services.
C)the practice of exchanging products and services for other products and services rather than for money.
D)the practice of exchanging services for products of equal or greater value.
E)the practice of exchanging products and services for money.

Question 10

All of the following statements about price are true EXCEPT:

A)Small changes in price can have big effects on both the number of units sold and company profit.
B)The price for a product or service must earn a profit for the company.
C)For most products and services,their prices are always the same.
D)The price must be "right"-in the sense that customers must be willing to pay it.
E)The price must generate enough sales dollars to pay for the cost of developing,producing,and marketing the product.

Question 11

Which of the following statements about StubHub is most accurate?

A)StubHub recently purchased Amazon.com for $253 million dollars.
B)StubHub was recently purchased by eBay.
C)Stub Hub had plans to enter the European market,but EU regulations made the plan unfeasible.
D)StubHub and Ticketmaster have a nonbinding agreement to cater to separate market segments (sports vs.concert)to avoid undue competition.
E)StubHub has had difficulty selling tickets in some states because they view the brokering of tickets as ticket scalping,which is illegal.

Question 12

Which of the following is an example of a price?

A)college tuition
B)operating costs
C)liquidity
D)value
E)stockholders' equity

Question 13

Attorneys' fees,entrance fees,train fares,and organization dues are all examples of

A)premiums.
B)barter.
C)profit.
D)price.
E)outlays.

Question 14

A company that manages apartments decides to buy 15 new dishwashers at a list price of $550 each as replacements for old dishwashers in a small apartment complex it owns.Because the company is buying more than 10 dishwashers,it is eligible for a $150-per-unit quantity discount.Financing charges total $20 per unit.The company gets $10 per dishwasher for the 15 dishwashers traded in.What is the final price the company will pay for each dishwasher (not the total cost)?

A)$390
B)$400
C)$410
D)$430
E)$730

Question 15

Price refers to

A)the value assigned to the exchange of products and services for other products and services.
B)the value judgment made by both the buyer and seller regarding an item's worth.
C)the money or other considerations (including other products and services)exchanged for the ownership or use of a product or service.
D)the value assessed for the benefits of using a product or service.
E)the highest monetary value a customer is willing to pay for a product or service.

Question 16

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

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

Question 17

StubHub's pricing formula is to

A)charge an escalating commission percentage based on the value of the ticket sold.
B)deduct a flat fee of $25 for every ticket sold regardless of its value.
C)include special surcharges for enabling prospective buyers to view,in 3D 360° streaming video on its YouTube channel,the seats at stadiums,concert halls,and other venues for the events they are interested in.
D)charge a commission to both buyers and sellers of the tickets sold on its website.
E)deduct the sales tax from the purchase of tickets based on the states where such taxes must be collected and forwarded.

Question 18

The use of "special fees" and "surcharges" is driven by consumers' zeal for __________ combined with the ease of making price comparisons on the Internet.

A)high prices
B)low prices
C)quality
D)value
E)warranties

Question 19

With over half of tickets to major events sold online,StubHub's website can help generate extra ticket sales for the original sponsors.This is why

A)Ticketmaster recently purchased StubHub for $213 million dollars.
B)StubHub has to pay licensing fees to all major sports teams whose tickets are sold on their website.
C)StubHub now has formal relationships not only with professional sports leagues,but also with many sports programs at major universities.
D)Stub Hub has expanded its mission from being "a sports ticket marketplace" to the "hub of all entertainment experiences."
E)StubHub pays a surtax on any ticket it sells if the games are not sold out at local stadiums.

Question 20

All of the following are synonyms for price EXCEPT:

A)a premium.
B)barter.
C)tuition.
D)a commission.
E)profit.

Question 21

Suppose you want to get "plugged in" and buy an all-electric Tesla Model S (see the photo above),the world's leading all-electric,zero-emission car that has a 265-mile range and can be recharged in three hours.The Tesla Model S Performance model has a list price of $87,500.However,you want several options (Performance Plus Package,red multi-coat armor paint,Tech package,Sound Studio Package,home charging station,performance wheels,and others)that will cost $17,500.An extended warranty will add an additional $5,000.However,if you put $50,000 down now and finance the balance over the next year,you will receive a dealer rebate of $5,000 off the list price.The dealer will give you a $7,000 trade-in allowance for your 2008 Honda Civic DX four-door sedan.In addition,you will have to pay a state sales tax of $10,000,an auto registration fee of $1,000 to the state,and a $1,000 destination charge to ship and prep the car.But because the Tesla Model S is an alternative energy vehicle,you qualify for a $2,500 state rebate and a $7,500 federal tax credit! Finally,your total finance charge is $7,000.Applying the price equation,what is your final price for the Tesla Model S?

A)$57,000
B)$68,000
C)$87,500
D)$107,000
E)$151,000

Question 22

When Pizza Hut announced it was going to add 25 percent more toppings to its Meat Lover's line of pizzas without increasing prices,what consumer motivation was it appealing to?

A)cost
B)appearance
C)value
D)price
E)quality

Question 23

The ratio of __________ to price is referred to as value.

A)prestige value
B)perceived benefits
C)costs
D)perceived quality
E)profits

Question 24

To increase value the most,marketers should

A)decrease benefits.
B)decrease benefits and increase price.
C)decrease price and increase benefits.
D)decrease price and decrease benefits.
E)do nothing and let the perceived value of the item increase as it matures in its life cycle.

Question 25

Which of the following statements is MOST ACCURATE?

A)For some products,price influences the perception of overall quality,and ultimately value,to consumers.
B)A consumer's view of a product's value is always tied to quality.
C)A consumer's view of value is a function of his or her education and income.
D)Price plays only a small part in a consumer's perceived value of a product or service.
E)Price plays a large role in assessing value but a very minor role in assessing quality.

Question 26

Price transparency is

A)the practice of changing prices for products and services in real time in response to supply and demand conditions.
B)a consumer's near-instantaneous access to competitor's prices for the same offering.
C)the practice of simultaneously increasing product and service benefits while maintaining or decreasing price.
D)the practice of replacing promotional allowances with lower manufacturer list prices.
E)the ratio of perceived benefits to price.

Question 27

A major grocery chain pays its baggers a regular hourly wage.The baggers not only pack the groceries,they also will take customers' groceries to their car,regardless of the weather.The baggers are not permitted to accept tips,even if they are offered.This carryout service is an example of

A)pricing enhancement.
B)societal pricing.
C)revenue sharing.
D)value-pricing.
E)cost-pricing.

Question 28

Tara is enrolled for spring semester at college.The tuition is $6,000,but she has a scholarship for $1,000 as well as a work-study grant of $1,500.The health fees and student activity fees are $150 for the semester.What is the final price that Tara will pay for the spring semester?

A)$2,500
B)$2,650
C)$3,150
D)$3,650
E)$6,150

Question 29

Creative marketers engage in value-pricing,which is the practice of simultaneously increasing product and service benefits while __________.

A)increasing costs
B)increasing price
C)increasing advertising
D)decreasing costs
E)maintaining or decreasing price

Question 30

The practice of simultaneously increasing product and service benefits while maintaining or decreasing price is referred to as __________.

A)value-pricing
B)customer-value pricing
C)competitive pricing
D)cost pricing
E)demand pricing

Question 31

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

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

Question 32

To increase value,marketers may __________,decrease price,or do both.

A)decrease benefits
B)increase benefits
C)increase price
D)increase advertising
E)do nothing and let the perceived value of the item increase as it matures in the life cycle

Question 33

Value-pricing refers to

A)the ratio of perceived benefits to price.
B)is the money or other considerations exchanged for the ownership or use of a product or service.
C)the practice of simultaneously increasing product and service benefits while maintaining or decreasing price.
D)the ratio of price to perceived benefits.
E)list price minus incentives and allowances plus extra fees.

Question 34

The co-founders of Dollar Shave Club,came up with this idea: Use __________ to sell razor blades in monthly subscription packages dirt cheap compared to those from Gillette or Schick.

A)point-of-purchase displays in barber shops and hair salons like Great Clips and Super Cuts
B)"daily deal" coupons from social media websites like Groupon and LivingSocial
C)BOGO offers in direct response advertising shown on cable TV networks at night
D)the sponsorship of the X Games televised on ESPN,whose viewers match the target market
E)direct-to-consumer marketing via the Internet such as a YouTube video

Question 35

Many cosmetology schools allow their advanced students to style hair for "real world" clients for a reduced fee.The students benefit from the experience,the clients get a less expensive haircut,and the school is able to provide students with additional training without costing it anything;in fact,they even profit from it.This is an example of

A)value-pricing.
B)societal pricing.
C)revenue sharing.
D)barter.
E)cost-assist pricing.

Question 36

The ratio of perceived benefits to __________ is referred to as value.

A)price
B)prestige
C)perceived quality
D)profits
E)perceived costs

Question 37

A consumer's near-instantaneous access to competitor's prices for the same offering is referred to as

A)dynamic pricing.
B)customer value pricing.
C)price transparency.
D)value-added pricing.
E)mobile media pricing.

Question 38

Many convenience stores now have mail slots where customers can pay their utility bills.The utility companies handle all the processing while the customers get the benefit of not having to use postage.The convenience store owner gets the advantage of the extra foot traffic.The mail slots are an example of

A)societal pricing.
B)revenue sharing.
C)value-pricing.
D)barter.
E)cost-pricing.

Question 39

The ratio of perceived benefits to price is referred to as

A)the price-quality relationship.
B)customer value pricing.
C)value-added pricing.
D)value analysis.
E)value.

Question 40

Most 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.

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

Question 41

Figure 13-2 above represents the six steps in setting price."C" represents the step at which a firm would

A)estimate demand and revenue.
B)identify pricing objectives and constraints.
C)scan competitors for prices of similar products or services.
D)determine cost,volume,and profit relationships.
E)establish the price range.

Question 42

Figure 13-2 above represents the six steps in setting price."F" represents the step at which a firm would

A)set list or quoted price.
B)select an approximate price level.
C)scan competitors for prices of similar products or services
D)make special adjustments to list or quoted price.
E)establish the price range.

Question 43

A buying situation can involve comparing the costs and benefits of substitute items-such as real sugar to the sugar substitute Splenda,which,although more expensive than sugar,is purchased by many consumers because it contains no calories.This situation involves the consumer considering

A)a marginal analysis.
B)a profit equation.
C)a break-even analysis.
D)price elasticity of demand.
E)a reference value.

Question 44

A BOGO offer is retail slang that means

A)big orders,greater overhead
B)buy one,get one
C)build only good offerings
D)bad once,good overall
E)buy over grand objectives

Question 45

A firm's profit equation demonstrates that profit equals __________.

A)Total cost + Total revenue
B)Total revenue − Total cost
C)Marginal revenue − Marginal cost
D)Price × Quantity
E)Total revenue + Marginal cost

Question 46

The American Eagle Outfitters in-store signage photo above shows that customers can buy an American Eagle Outfitters hoodie for $24.95 and then purchase another one for 50 percent off (BOGO Deal "A").Another BOGO deal (not shown above)offers consumers a markdown of 10 percent if they buy two hoodies (BOGO Deal "B").In a third BOGO deal (not shown above),a retailer has marked down the price of hoodies from $24.95 to $22.95 per hoodie,so you'll consider buying two at that price (BOGO Deal "C").BOGO deal #4 (not shown above)offers consumers the following terms: 5 percent off the first item and then 10 percent off the reduced price for the second item (BOGO Deal "D").Finally,a fifth BOGO deal offers consumers the following terms: $10 off of all purchases of $40 or more (BOGO Deal "E").Which BOGO deal offers the best value (least cost)to consumers for the purchase of American Eagle Outfitters hoodies?

A)BOGO Deal "A"
B)BOGO Deal "B"
C)BOGO Deal "C"
D)BOGO Deal "D"
E)BOGO Deal "E"

Question 47

A reference value involves comparing the costs and benefits of __________.

A)substitute items
B)items of equal or greater value
C)products with which a consumer is familiar and items the consumer has not seen or used before
D)items from one particular distributor
E)intangible items

Question 48

Figure 13-2 above represents the six steps in setting price.Which letter represents the step where a firm would estimate price elasticity?

A)"A"
B)"B"
C)"C"
D)"D"
E)"E"

Question 49

Figure 13-2 above represents the six steps in the price-setting process."A" represents the step at which a firm would

A)raise initial capital.
B)identify pricing objectives and constraints.
C)scan competitors for prices of similar products or services.
D)select the appropriate pricing formula.
E)establish the price range.

Question 50

The __________ equation = (Unit price × Quantity sold)− Total cost.

A)total revenue
B)variable cost
C)net present value
D)profit
E)break-even point

Question 51

Calculate a firm's total revenue (TR)using the following information: the unit price (P)for a product is $40;the quantity sold (Q)is 2,000;the fixed cost (FC)is $50,000;and the variable cost (VC)is $20,000.

A)$10,000
B)$50,000
C)$110,000
D)$150,000
E)cannot be determined with the information provided

Question 52

As shown in the McDonald's menu board photo above,McDonald's is most likely using which type of pricing strategy?

A)predatory pricing
B)value pricing
C)loss-leader pricing
D)odd-even pricing
E)barter

Question 53

The formula,Total revenue − Total cost or [(Unit price × Quantity sold)− (Fixed cost + Variable cost)] represents __________.

A)the value equation
B)the sales ratio
C)average revenue
D)the break-even point
E)the profit equation

Question 54

A firm's profit equation equals

A)Total cost + Total revenue or [(Fixed cost + Variable cost)+ (Unit price × Quantity sold)].
B)Total revenue − Total cost or [(Unit price × Quantity sold)− (Fixed cost + Variable cost)].
C)Total cost − Marginal cost or [(Fixed cost + Variable cost)− (Unit price × Quantity sold)].
D)Total cost − Variable cost or [(Fixed cost + Variable cost)− (Unit price × Quantity sold)].
E)Total revenue / Total cost or [(Unit price × Quantity sold)÷ (Fixed cost + Variable cost)].

Question 55

A reference value __________.

A)is relative to the amount of time and energy a consumer puts into the purchase process
B)is based upon the value assigned to similar items used by the consumer's peers
C)results from performing a careful break-even analysis
D)involves comparing the costs and benefits of substitute items
E)is based upon the differential between customers' "needs" and "wants"

Question 56

Figure 13-2 above represents the six steps in setting price."E" represents the step at which a firm would

A)set list or quoted price.
B)select an approximate price level.
C)scan competitors for prices of similar products or services.
D)determine cost,volume,and profit relationships.
E)establish the price range.

Question 57

The Gap in-store signage photo above shows that customers can save 60 percent off a second item if they purchase one at the full price.This is an example of a __________ deal to entice shoppers to buy additional items.

A)Big Clearance
B)Extra Value
C)BOGO
D)Inventory Reduction Sale
E)Barter

Question 58

If you wanted to buy a McDonald's Big Mac,small fries,and a small drink separately,it will you cost you $6.19.However,if you purchased these three items together as part of the firm's Extra Value Meal package,you would pay only $4.39,savings 80¢.This "Extra Value Meal" price serves as __________ to you and other consumers,who compare the costs and benefits of substitute items to a bundle containing those items.

A)a marginal analysis
B)a profit equation
C)a reference value
D)a break-even analysis
E)price elasticity of demand

Question 59

Figure 13-2 above represents the six steps in setting price."B" represents the step at which a firm would

A)estimate demand and revenue.
B)identify pricing objectives and constraints.
C)scan competitors for prices of similar products or services.
D)select the appropriate pricing formula.
E)determine cost,volume,and profit relationships.

Question 60

Figure 13-2 above represents the six steps in setting price."D" represents the step at which a firm would

A)estimate demand and revenue.
B)scan competitors for prices of similar products or services.
C)select an approximate price level.
D)determine cost,volume,and profit relationships.
E)establish the price range.

Question 61

Which of the following are examples of elements involved in Step 1 of the price-setting process: identify pricing objectives?

A)profit,market share,and survival
B)estimation of demand,sales revenue,and price elasticity
C)cost estimation,marginal analysis,and break-even analysis
D)demand for the product class and brand,newness of the product,and competition
E)market segmentation targeting,and positioning

Question 62

Objectives like profit,market share,and survival as well as constraints such demand for product class and brand,newness,costs,and competition are issues that would be addressed during __________ of the price-setting process.

A)Step 1
B)Step 2
C)Step 3
D)Step 4
E)Step 5

Question 63

Figure 13-2 above represents the six steps in setting price.Which letter represents the step where a firm would estimate dollar and unit sales revenues?

A)"A"
B)"B"
C)"C"
D)"D"
E)"E"

Question 64

Which of the following would be an example of a constraint in Step 1 of the price-setting process?

A)"We can rely on our reputation for our other products in the line."
B)"Experts are predicting a surge in global demand."
C)"We need to make allowances for large quantity orders."
D)"We should increase the price during the holiday shopping season."
E)"We're going to face some stiff competition."

Question 65

Figure 13-2 above represents the six steps in setting price.Which letter represents the step where a firm would estimate costs and perform a marginal analysis to assess profitability?

A)"A"
B)"B"
C)"C"
D)"D"
E)"E"

Question 66

Which of the following are elements of Step 3 in the price-setting process?

A)profit,market share,and survival
B)estimation of demand,sales revenue,and price elasticity
C)cost estimation,marginal analysis,and break-even analysis
D)demand for the product class and brand,newness of the product,and competition
E)market segmentation targeting,and positioning

Question 67

Figure 13-2 above represents the six steps in setting price.Which letter represents the step where a firm would conduct a break-even analysis?

A)"A"
B)"B"
C)"C"
D)"D"
E)"E"

Question 68

Which of the following would be an example of an objective in Step 1 of the price-setting process?

A)"We need to set an initial price of $259 dollars per unit."
B)"We need to find the least expensive distributor."
C)"We need to make a profit of at least $1.2 million."
D)"We need to make allowances for large quantity orders."
E)"We need to increase the price during the holiday shopping season."

Question 69

Which of the following would be an example of a constraint in Step 1 of the price-setting process?

A)"We can rely on our reputation for our other products in the line."
B)"Experts are predicting a surge in global demand."
C)"We need to make allowances for large quantity orders."
D)"We should increase the price during the holiday shopping season."
E)"Remember,we don't know what the selective demand for this new product will be."

Question 70

Figure 13-2 above represents the six steps in setting price.Which letter represents the step where a firm would estimate demand?

A)"A"
B)"B"
C)"C"
D)"D"
E)"E"

Question 71

Which of the following would be an example of an objective in Step 1 of the price-setting process?

A)"We need to find the least expensive distributor."
B)"We need to make allowances for large quantity orders."
C)"We need to increase the price during the holiday shopping season."
D)"We need to forget profits right now;just make sure we break even."
E)"We need to hire a professional accountant."

Question 72

Estimating cost,conducting a marginal analysis,and performing a break-even analysis are issues that would be addressed during __________ of the price-setting process.

A)Step 1
B)Step 2
C)Step 3
D)Step 4
E)Step 5

Question 73

Figure 13-2 above represents the six steps in setting price.Which letter represents the step where a firm would identify pricing objectives such as profit,market share,and survival?

A)"A"
B)"B"
C)"C"
D)"D"
E)"E"

Question 74

Which of the following would be an example of an objective in Step 1 of the price-setting process?

A)"We need to set an initial price of $259 dollars per unit."
B)"We need to obtain a ten percent market share."
C)"We need to find the least expensive distributor."
D)"We need to make allowances for large quantity orders."
E)"We need to increase the price during the holiday shopping season."

Question 75

An analysis of a prospective product shows that sales for it are expected to grow by at least 10 percent each year over the next 5 years before it enters the maturity phase of its product life cycle.This type of analysis would provide useful information in which step of the price-setting process?

A)identifying pricing objectives and constraints
B)determining cost,volume,and profit relationships
C)estimating demand and revenue
D)selecting an appropriate (approximate)price lining strategy
E)making special adjustments to list or quoted price

Question 76

Estimating demand,sales revenue,and price elasticity are issues that would be addressed during __________ of the price-setting process.

A)Step 1
B)Step 2
C)Step 3
D)Step 4
E)Step 5

Question 77

Figure 13-2 above represents the six steps in setting price.Which letter represents the step where a firm would assess the constraints on the demand for the product class and brand?

A)"A"
B)"B"
C)"C"
D)"D"
E)"E"

Question 78

Which of the following represent elements of Step 2 of the price-setting process?

A)profit,market share,and survival
B)estimation of demand,sales revenue,and price elasticity
C)cost estimation,marginal analysis,and break-even analysis
D)demand for the product class and brand,newness of the product,and competition
E)market segmentation targeting,and positioning

Question 79

George and Alice Renfro decided to start a family business in 1990.Its product-chowchow,a southern regional food.To determine how they would price the chowchow,the Renfros had to: (1)examine the demand for the product and how much it would cost to distribute the product to area grocery stores.For the Renfros,Step 1 of their price-setting process consists of

A)identifying pricing constraints.
B)estimating break-even points and revenue points.
C)setting the list price.
D)selecting an approximate price level.
E)determining cost,volume,and profit relationships.

Question 80

Which of the following statements would most likely be spoken during Step 2 of the price-setting process?

A)"It's important to offer discounts to seniors."
B)"We have to try to achieve an 8% profit share."
C)"The starting price should be $4.99 and we can raise the price again in six months."
D)"But,if we increase the price even by one dollar,how many customers will we lose?"
E)"We should probably price the extra large version somewhere between $600 and $650."