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Exam 14: Arriving at the Final Price

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Question 111

Multiple Choice

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A retailer purchased a gross (144) of silk shells each costing exactly $17. Although the only difference between the shells was color, when they were put on the floor, the primary colors were marked $25, the pastel colors were marked $28, and the black-and-white shells were marked $30. These prices were set most likely because

A) retailers using a price lining strategy will occasionally mark up items based on color, style, and expected consumer demand.
B) fewer people buy black-and-white shells, so the retailer has to charge a higher price to break even.
C) the retailer is using prestige pricing; black-and-white shells are more elegant.
D) the primary colors were priced using a penetration strategy, the pastels were priced using a skimming strategy, and the black-and-white shells were priced using prestige pricing.
E) the retailer is essentially using above-, at-, and below-market pricing for the three groupings.

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

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Question 112

Multiple Choice

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Seasonal discounts are used by manufacturers to

A) get rid of dated merchandise.
B) prevent retailers from purchasing competitors' products.
C) prolong the peak seasonal selling season.
D) establish an immediate feeling of goodwill between the buyer and seller that hopefully will continue when prices return to normal.
E) entice dealers to purchase seasonal merchandise earlier in the selling season.

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

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Question 113

Multiple Choice

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Figure 14-3 -The movement from point A to point B in Figure 14-3 above shows

Allowances, like discounts, are

The purpose of a cash discount is to

The retail price of mobile phones (unsubsidized) has decreased from $4,000 in 1983 when Motorola commercialized the device, to less than $99 today as the volume increased from zero to millions of units sold. This is due in large part to which type of pricing approach?

Price discrimination is

All of these are pricing practices that are closely scrutinized because of potential unethical or illegal actions except which?

Incremental analysis might take the form of such questions as, "Should we extend our hours to include Sundays?" or "What if we put more apples in the pie?" The basic principle is that

Setting a market price for a product or product class based on a subjective feel for the competitors' price or market price as the benchmark is referred to as

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

Which of these businesses would be most likely to use target return-on-investment pricing?

Which of these statements regarding quantity discounts is most accurate?

Frito-Lay recognizes that its tortilla chip products are partial substitutes for one another. Its bean and cheese dips and salsa sauces complement its tortilla chips. Frito-Lay uses this knowledge to set prices for each item in order to ensure that the entire line is profitable. This pricing strategy is known as

When Dell sells various laptops, it also pre-installs Microsoft Office and other software that customers order at a discount before a laptop is shipped. This is an example of

A penetration pricing policy is most likely to be effective when which of these is true?

Figure 14-5 -Figure 14-5 above shows the results of a spreadsheet simulation to select a price to achieve a target return on investment (ROI) . What is the ROI for Scenario A?

Setting the highest initial price that customers really desiring the product are willing to pay when introducing a new or innovative product is referred to as

The practice of charging a very low price for a product with the intent of driving competitors out of business is referred to as

The two forms of cost-plus pricing are