Question 1

Florida Power & Light, an electric power company, is the only source of electricity for consumers in most parts of the Florida panhandle. The company is ________, despite the fact that it must seek approval from the state utility commission for the rates it can charge.

Accepted Answer

A)   a free enterprise firm
B)   an oligopoly
C)   a monopolistic competitor
D)   a competitor in a pure competition
E)   a pure monopolyF) C) and D)
G) A) and C)

Question 2

A demand curve graph typically appears as

Accepted Answer

A)   a parabola with the apex representing the highest price that can be charged without losing customers.
B)   a diagonal line going from upper left to lower right demonstrating that as price goes down, demand goes up.
C)   an inverted parabola with the lowest point representing the lowest price that can be charged and still meet the company's profit objectives.
D)   a diagonal line going from lower left to upper right demonstrating that as prices go up, demand goes up proportionately.
E)   two intersecting lines that identify the point at which supply and demand are exactly the same.F) D) and E)
G) C) and D)

Question 3

Figure 13-6
-The owner of a picture frame store has generated a spreadsheet of several calculations based on different quantity, price, revenue, cost, and profit scenarios shown in Figure 13-6 above. What is the break-even point quantity for her picture frame store?

Accepted Answer

A)   0
B)   400
C)   800
D)   1,200
E)   2,000F) All of the above
G) C) and D)

Question 4

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

Accepted Answer

A)   We need to estimate the demand for this new product.
B)   We can rely on our reputation to introduce this product.
C)   Experts are predicting a slowing global economy.
D)   We need to forget profits right now; just make sure we break even.
E)   We need to hire a professional accountant.F) A) and C)
G) A) and B)

Question 5

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

Accepted Answer

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

Question 6

Which of these is a typical example of a fixed cost?

Accepted Answer

A)   taxes
B)   raw materials
C)   sales commissions
D)   executive salaries
E)   hourly wagesF) A) and B)
G) A) and C)

Question 7

Price is

Accepted Answer

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 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.F) A) and E)
G) C) and D)

Question 8

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

Accepted Answer

A)   price
B)   prestige
C)   anticipated quality
D)   profits
E)   discountsF) A) and E)
G) A) and B)

Question 9

Assuming there is no change in a product's price or the quantity demanded, if a business owner wants to increase her advertising expenses by $500 monthly, this would cause total costs to ________ and the break-even quantity to

Accepted Answer

A)   decrease; stay the same.
B)   increase; increase.
C)   decrease; increase.
D)   stay the same; increase.
E)   stay the same; decrease.F) C) and D)
G) D) and E)

Question 10

A firm's profit objective is often measured in terms of ROI. The acronym ROI stands for

Accepted Answer

A)   risk opportunity investment.
B)   revised organizational incentives.
C)   return on investment.
D)   regulated organizational investments.
E)   replenishment of organizational inventories.F) A) and D)
G) B) and E)

Question 11

Figure 13-7B
-The break-even chart for a picture frame store in Figure 13-7 above shows that by selling 800 pictures, the store will

Accepted Answer

A)   break even.
B)   earn a profit.
C)   incur a loss.
D)   have no fixed costs.
E)   have no variable costs.F) A) and B)
G) A) and C)

Question 12

Three different pricing objectives relate to a firm's profit. One objective, known as ________, occurs when a firm sets a profit goal, usually determined by its board of directors.

Accepted Answer

A)   maximizing current profit
B)   managing for long-run profits
C)   target return
D)   break-even strategy
E)   minimizing riskF) A) and B)
G) B) and D)

Question 13

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 five 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?

Accepted Answer

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 priceF) A) and B)
G) All of the above

Question 14

________ = (Unit price × Quantity sold)  − Total cost.

Accepted Answer

A)   Total revenue
B)   Variable cost
C)   Net present value
D)   Profit
E)   Break-even pointF) C) and D)
G) B) and D)

Question 15

Ampro-Mag makes materials for safely controlling hazardous spills of all kinds. It sells these items as a neutralizing kit priced at $100. 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 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?

Accepted Answer

A)   40 kits
B)   52 kits
C)   104 kits
D)   116 kits
E)   520 kitsF) B) and D)
G) B) and C)

Question 16

In a snack vending machine, consumers can select one of many choices. These snacks are

Accepted Answer

A)   an ideal example of unitary demand.
B)   likely to have a price elasticity equal to 1.
C)   more likely to be price elastic.
D)   likely to have a price elasticity less than 1.
E)   more likely to be price inelastic.F) None of the above
G) A) and E)

Question 17

If competitive market circumstances are such that there are few sellers who are sensitive to each other's prices, and the purpose of advertising is to inform but avoid price competition, then ________ must exist in the industry.

Accepted Answer

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

Question 18

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?

Accepted Answer

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

Question 19

Competitors' prices are important only if a prospective buyer knows about those prices and

Accepted Answer

A)   can act to purchase them easily.
B)   there is an oligopoly in the industry.
C)   is part of a price-sensitive market segment.
D)   the product is at the maturity stage of the product life cycle.
E)   is likely to spread information via word-of-mouth.F) A) and E)
G) B) and D)

Question 20

A common pricing tactic today is the use of special fees and surcharges that add to a list price, a response to consumers' zeal for ________ combined with the ease of making price comparisons on the Internet.

Accepted Answer

A)   readily accessible information
B)   low prices
C)   quality
D)   value
E)   warrantiesF) A) and D)
G) C) and D)

Exam 13: Building the Price Foundation

Price is

Correct Answer
verified

Florida Power & Light, an electric power company, is the only source of electricity for consumers in most parts of the Florida panhandle. The company is ________, despite the fact that it must seek approval from the state utility commission for the rates it can charge.

Correct Answer
verified

In a snack vending machine, consumers can select one of many choices. These snacks are

Correct Answer
verified

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?

Correct Answer
verified

Figure 13-7B -The break-even chart for a picture frame store in Figure 13-7 above shows that by selling 800 pictures, the store will

Correct Answer
verified

Correct Answer
verified

A common pricing tactic today is the use of special fees and surcharges that add to a list price, a response to consumers' zeal for ________ combined with the ease of making price comparisons on the Internet.

Correct Answer
verified

Correct Answer
verified

Figure 13-6 -The owner of a picture frame store has generated a spreadsheet of several calculations based on different quantity, price, revenue, cost, and profit scenarios shown in Figure 13-6 above. What is the break-even point quantity for her picture frame store?

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

Assuming there is no change in a product's price or the quantity demanded, if a business owner wants to increase her advertising expenses by $500 monthly, this would cause total costs to ________ and the break-even quantity to

Correct Answer
verified

Competitors' prices are important only if a prospective buyer knows about those prices and

Correct Answer
verified

________ = (Unit price × Quantity sold) − Total cost.

Correct Answer
verified

If competitive market circumstances are such that there are few sellers who are sensitive to each other's prices, and the purpose of advertising is to inform but avoid price competition, then ________ must exist in the industry.

Correct Answer
verified

Three different pricing objectives relate to a firm's profit. One objective, known as ________, occurs when a firm sets a profit goal, usually determined by its board of directors.

Correct Answer
verified

A demand curve graph typically appears as

Correct Answer
verified

A firm's profit objective is often measured in terms of ROI. The acronym ROI stands for

Correct Answer
verified

Which of these is a typical example of a fixed cost?

Correct Answer
verified

Exam 13: Building the Price Foundation

Price is

Correct AnswerverifiedShow Answer

Florida Power & Light, an electric power company, is the only source of electricity for consumers in most parts of the Florida panhandle. The company is ________, despite the fact that it must seek approval from the state utility commission for the rates it can charge.

Correct AnswerverifiedShow Answer

In a snack vending machine, consumers can select one of many choices. These snacks are

Correct AnswerverifiedShow Answer

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?

Correct AnswerverifiedShow Answer

Figure 13-7B -The break-even chart for a picture frame store in Figure 13-7 above shows that by selling 800 pictures, the store will

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A common pricing tactic today is the use of special fees and surcharges that add to a list price, a response to consumers' zeal for ________ combined with the ease of making price comparisons on the Internet.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Figure 13-6 -The owner of a picture frame store has generated a spreadsheet of several calculations based on different quantity, price, revenue, cost, and profit scenarios shown in Figure 13-6 above. What is the break-even point quantity for her picture frame store?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Assuming there is no change in a product's price or the quantity demanded, if a business owner wants to increase her advertising expenses by $500 monthly, this would cause total costs to ________ and the break-even quantity to

Correct AnswerverifiedShow Answer

Competitors' prices are important only if a prospective buyer knows about those prices and

Correct AnswerverifiedShow Answer

________ = (Unit price × Quantity sold) − Total cost.

Correct AnswerverifiedShow Answer

If competitive market circumstances are such that there are few sellers who are sensitive to each other's prices, and the purpose of advertising is to inform but avoid price competition, then ________ must exist in the industry.

Correct AnswerverifiedShow Answer

Three different pricing objectives relate to a firm's profit. One objective, known as ________, occurs when a firm sets a profit goal, usually determined by its board of directors.

Correct AnswerverifiedShow Answer

A demand curve graph typically appears as

Correct AnswerverifiedShow Answer

A firm's profit objective is often measured in terms of ROI. The acronym ROI stands for

Correct AnswerverifiedShow Answer

Which of these is a typical example of a fixed cost?

Correct AnswerverifiedShow Answer

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