Question 1

Microsoft, Sony, and Nintendo are the three principal firms in the video game console market. How much price competition is likely for video game makers?

Accepted Answer

A)   There is almost none; the market sets the price.
B)   There is vigorous competition and common price wars to drive small competitors out.
C)   There is generally a price leader that sets the price.
D)   Each firm is aware of each other's prices and may adjust prices accordingly.
E)   Price is set by the seller but regulated by the government.F) B) and C)
G) A) and D)

Question 2

Each month, the owner of a car wash pays $2,500 in rent, $500 in utilities, $750 interest on the business loan, an insurance premium of $200, and $250 on advertising on local bus routes. A full-service car wash is priced at $10.50. Unit variable costs for the car wash are $7.50. At what level of revenue will the car wash break even?

Accepted Answer

A)   $4,200
B)   $10,500
C)   $14,700
D)   $30,000
E)   $39,900F) All of the above
G) A) and D)

Question 3

A reference valueis developed by the consumer through

Accepted Answer

A)   considering the amount of time and energy a consumer puts into the purchase process.
B)   judging the value assigned to similar items used by the consumer's peers.
C)   performing a careful break-even analysis.
D)   comparing the costs and benefits of substitute items.
E)   examining the true difference between customers' "needs" and "wants."F) A) and B)
G) All of the above

Question 4

Which of these statements regarding pricing constraints is most accurate?

Accepted Answer

A)   When a product is in the introductory stage of the product life cycle, the initial price must be low since consumers don't know what the product can do.
B)   Patents and limited competition earlier the product life cycle mean that higher prices can usually be charged for new products.
C)   The greater the number of products in a company's product line, the less the product features of similar products can affect price.
D)   The newest addition to a company's product line should always have the highest price in order to maintain the value of existing brands.
E)   To avoid cannibalization, the newest product addition to a company's product line should never have a price lower than the other offerings in the line.F) A) and B)
G) A) and C)

Question 5

Barter is

Accepted Answer

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

Question 6

Explain the price equation in the context of a new car purchase.

Accepted Answer

The price equation is: Final price = Lis...

Question 7

A demand curve is a graph that relates

Accepted Answer

A)   the quantity sold and price, which shows the maximum number of units that will be sold at a given price.
B)   revenues and costs, which shows the minimum number of units that must be sold to break even.
C)   the quantity sold and revenues, which shows the minimum number of units that must be sold in order to make a profit.
D)   total production costs to various price points in order to determine how many units must be sold in order to realize a predetermined profit.
E)   primary demand to selective demand, which shows the growth of the market compared to change in market share.F) A) and C)
G) B) and E)

Question 8

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

Accepted Answer

A)   constraints and objectives
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 positioningF) C) and D)
G) A) and D)

Question 9

George and Alice Renfro decided to start a family business in 1990 to produce chowchow, a Southern regional food. To determine how they would price the chowchow, the Renfros had to examine (1)  the demand for the product the cost to distribute the product to area grocery stores. The Renfros are doing which step of the price-setting process?

Accepted Answer

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 relationshipsF) A) and D)
G) B) and C)

Question 10

Occasionally, prices may rise later in the product's life cycle. This is often due to

Accepted Answer

A)   new competitors entering the market.
B)   production economies of scale.
C)   a decrease in the price of raw materials.
D)   nostalgia and fad factors.
E)   the type of competitive market shifts from pure monopoly to pure competition.F) B) and D)
G) A) and B)

Question 11

If a firm's profit is high enough for it to remain in business, a pricing objective may be to ________, which will in turn may lead to increases in market share and profit.

Accepted Answer

A)   increase the commitment to social responsibility
B)   increase dollar sales revenue
C)   decrease unit volume while maintaining price
D)   increase research and development funding for new product line extensions
E)   continue with previous policies that seem to be workingF) D) and E)
G) A) and B)

Question 12

In the purchase of the sugar substitute Splenda, you may compare it to something you know about like real sugar. Although Splenda is more expensive than sugar, it is purchased by many consumers because it sweetens with no calories. Here, the consumer is considering

Accepted Answer

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

Question 13

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

Accepted Answer

A)   We need to set an initial price of $259 per unit.
B)   We need to obtain a 10 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.F) A) and E)
G) C) and D)

Question 14

You are selling a new line of T-shirts on the boardwalk. The selling price will be $25 per shirt. The labor cost is $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?

Accepted Answer

A)   2,000 shirts
B)   3,200 shirts
C)   5,334 shirts
D)   8,000 shirts
E)   16,000 shirtsF) A) and E)
G) A) and D)

Question 15

What are the six broad objectives that an organization may pursue that tie in directly to its pricing policies?

Accepted Answer

The six broad objectives that ...

Question 16

The difference between unit selling price and unit variable cost expressed on a unit basis is referred to as

Accepted Answer

A)   fixed cost.
B)   break-even point.
C)   contribution margin.
D)   unit cost.
E)   total variable cost.F) B) and E)
G) All of the above

Question 17

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

Accepted Answer

A)   prestige
B)   perceived benefits
C)   costs
D)   anticipated quality
E)   profitsF) A) and E)
G) B) and D)

Question 18

In which type of industry would a marketing director be most likely to say, "We have to let the customer know that our product is the only one that comes with its own tracking device"?

Accepted Answer

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

Question 19

Susan hired an attorney to represent her in a court case involving an auto accident. The attorney charged her a $2,000 retainer fee for the services. Terry needed a haircut; the local stylist charged him $12 for his services. Aaron mowed his neighbor's lawn; in exchange, the neighbor repaired his gutters. The attorney fees, the $12 charged by the hair stylist, and the exchange of lawn mowing for gutter repair are all examples of

Accepted Answer

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

Question 20

Companies often pursue a market share objective when

Accepted Answer

A)   industry sales are flat or declining.
B)   profits are increasing.
C)   industry sales are beginning to rise.
D)   there is a sudden increase in production costs.
E)   stockholders are seeking higher dividends.F) A) and E)
G) B) and C)

Exam 13: Building the Price Foundation

Correct Answer
verified

Which of these statements regarding pricing constraints is most accurate?

Correct Answer
verified

Occasionally, prices may rise later in the product's life cycle. This is often due to

Correct Answer
verified

Microsoft, Sony, and Nintendo are the three principal firms in the video game console market. How much price competition is likely for video game makers?

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 difference between unit selling price and unit variable cost expressed on a unit basis is referred to as

Correct Answer
verified

A demand curve is a graph that relates

Correct Answer
verified

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

Correct Answer
verified

In which type of industry would a marketing director be most likely to say, "We have to let the customer know that our product is the only one that comes with its own tracking device"?

Correct Answer
verified

A reference valueis developed by the consumer through

Correct Answer
verified

Barter is

Correct Answer
verified

Companies often pursue a market share objective when

Correct Answer
verified

Correct Answer
verified

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

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

If a firm's profit is high enough for it to remain in business, a pricing objective may be to ________, which will in turn may lead to increases in market share and profit.

Correct Answer
verified

What are the six broad objectives that an organization may pursue that tie in directly to its pricing policies?

Correct Answer
verified
The six broad objectives that ...
View Answer

In the purchase of the sugar substitute Splenda, you may compare it to something you know about like real sugar. Although Splenda is more expensive than sugar, it is purchased by many consumers because it sweetens with no calories. Here, the consumer is considering

Correct Answer
verified

Explain the price equation in the context of a new car purchase.

Correct Answer
verified
The price equation is: Final price = Lis...
View Answer

Exam 13: Building the Price Foundation

Correct AnswerverifiedShow Answer

Which of these statements regarding pricing constraints is most accurate?

Correct AnswerverifiedShow Answer

Occasionally, prices may rise later in the product's life cycle. This is often due to

Correct AnswerverifiedShow Answer

Microsoft, Sony, and Nintendo are the three principal firms in the video game console market. How much price competition is likely for video game makers?

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 difference between unit selling price and unit variable cost expressed on a unit basis is referred to as

Correct AnswerverifiedShow Answer

A demand curve is a graph that relates

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

In which type of industry would a marketing director be most likely to say, "We have to let the customer know that our product is the only one that comes with its own tracking device"?

Correct AnswerverifiedShow Answer

A reference valueis developed by the consumer through

Correct AnswerverifiedShow Answer

Barter is

Correct AnswerverifiedShow Answer

Companies often pursue a market share objective when

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

If a firm's profit is high enough for it to remain in business, a pricing objective may be to ________, which will in turn may lead to increases in market share and profit.

Correct AnswerverifiedShow Answer

What are the six broad objectives that an organization may pursue that tie in directly to its pricing policies?

Correct AnswerverifiedThe six broad objectives that ...View AnswerShow Answer

In the purchase of the sugar substitute Splenda, you may compare it to something you know about like real sugar. Although Splenda is more expensive than sugar, it is purchased by many consumers because it sweetens with no calories. Here, the consumer is considering

Correct AnswerverifiedShow Answer

Explain the price equation in the context of a new car purchase.

Correct AnswerverifiedThe price equation is: Final price = Lis...View AnswerShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
The six broad objectives that ...
View Answer

Correct Answer
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Correct Answer
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The price equation is: Final price = Lis...
View Answer