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Susan O'Rourke hired an attorney to represent her in a court case involving an auto accident.The attorney charged O'Rourke a 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.

F) B) and D)
G) C) and E)

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The __________ is the ratio of profit to the investment used to earn that profit.


A) markup
B) selling margin
C) return on investment
D) return on assets
E) markdown

F) A) and B)
G) C) and D)

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What do 60 percent of prospective buyers dread about looking for a new car?


A) selecting the preferred brand
B) negotiating the price
C) taking a test drive
D) experiencing postpurchase dissonance
E) searching for cars on the Internet

F) A) and D)
G) B) and E)

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Which of the following is the first step in setting a final price for a product?


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) identify pricing objectives and constraints

F) B) and D)
G) A) and E)

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When you buy a used car from a CarMax dealership,you are offered the car at a "no haggle" price.You can buy it or not,but there is no negotiating the published price because of the seller's


A) customary pricing strategy.
B) one-price policy.
C) uniform pricing policy.
D) flexible-price policy.
E) dynamic pricing strategy.

F) B) and D)
G) B) and C)

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A negative aspect of selecting unit volume as a pricing objective is that


A) production often cannot keep up with demand.
B) there are increased carrying costs with extensive inventories.
C) if price reductions are used to achieve volume objectives,it can sometimes come at the expense of profits.
D) it can create competition between divisions within the organization itself causing conflicts over the allocation of resources.
E) it always positively correlates with a sales revenue objective.

F) None of the above
G) A) and E)

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Penetration pricing is considered to be a __________ approach to pricing.


A) demand-oriented
B) cost-oriented
C) profit-oriented
D) competition-oriented
E) service-oriented

F) All of the above
G) B) and E)

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The maximum quantity of products consumers will buy at given price is shown by


A) a demand curve.
B) a price constraint.
C) a break-even point.
D) a supply curve.
E) a marginal revenue curve.

F) A) and C)
G) A) and B)

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Market share is the ratio of the __________ to those of the industry,including the firm itself.


A) target return on sales
B) marginal profit of the firm
C) firm's sales revenues or unit sales
D) marketing expenses of the firm
E) profits of the firm

F) A) and C)
G) A) and B)

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Which of the following is a typical example of a fixed cost?


A) taxes
B) raw materials
C) sales commissions
D) building rental expense
E) hourly wages

F) C) and D)
G) A) and B)

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All of the following are examples of pricing constraints EXCEPT:


A) cost of producing the product.
B) competitors' prices.
C) newness of the product (stage in its life cycle) .
D) social responsibility.
E) demand for the product class,product,or brand.

F) None of the above
G) D) and E)

Correct Answer

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Rents,executive salaries,and insurance are typical examples of


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

F) A) and E)
G) A) and D)

Correct Answer

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Break-even analysis refers to


A) a process that investigates the difference between marginal revenue and marginal cost.
B) a method of determining just how much a consumer is willing to pay for a product or service.
C) a technique that analyzes the relationship between total revenue and total cost to determine profitability at various levels of output.
D) the process of determining the quantity of product consumers will buy relative to the quantity produced by the firm.
E) the graph that shows the maximum number of products consumers will buy at a given price.

F) A) and C)
G) All of the above

Correct Answer

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For years,a local "greasy spoon" diner had customers lining up around the building for breakfast.When the city announced that it was building an off ramp from the highway that would conceivably double his customer traffic,the proprietor was delighted.Having saved enough in previous years,he was certain it could hold him over through the three-month construction.Unfortunately,construction delays continued for an additional six months and the work is still in progress.The best pricing objective at this point for the diner's owner would most likely be __________.


A) profit
B) market share
C) unit volume
D) survival
E) social responsibility

F) A) and D)
G) A) and E)

Correct Answer

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Marketing two or more products in a single package price is referred to as


A) package pricing.
B) loss-leader pricing.
C) bundle pricing.
D) tie-in pricing.
E) multi-product pricing.

F) C) and D)
G) A) and B)

Correct Answer

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Target pricing refers to


A) a method of selecting specific prices wholesalers and retailers are willing to pay based upon the elasticity of each given item.
B) a method of charging different prices to maximize revenue for a set amount of capacity at any given time.
C) the practice of simultaneously increasing product and service benefits while maintaining or decreasing price.
D) a method of estimating the price that ultimate consumers would be willing to pay for a product,then working backward through markups taken by retailers and wholesalers to determine what price to charge wholesalers.
E) a method of estimating the price that ultimate consumers would be willing to pay for a product,then determining how much wholesalers wish to charge its customers,deliberately adjusting the composition and features of the product to achieve the target price to consumers.

F) B) and E)
G) None of the above

Correct Answer

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A specialty-toy retailer may pursue a __________ pricing objective to generate cash to ward off bankruptcy.


A) market share
B) survival
C) sales revenue
D) single product line
E) profit

F) All of the above
G) A) and C)

Correct Answer

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The __________ of a product is what customers are generally willing to pay.


A) customary price
B) asking price
C) target price
D) discount price
E) market price

F) B) and C)
G) A) and B)

Correct Answer

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


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

F) D) and E)
G) C) and E)

Correct Answer

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Yield management pricing is most consistent with services trying to deal with


A) perceived risk.
B) capacity management.
C) cognitive dissonance.
D) inelasticity of demand.
E) new product strategy development.

F) C) and E)
G) A) and C)

Correct Answer

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