Question 1

Which of the following statements would most likely be spoken while determining cost,volume,and profit relationships in the price-setting process?

Accepted Answer

A)  "In order to break even,we will need to sell at least 500,000 units."
B)  "We have to try to achieve an 8 percent 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 $1,how many customers will we lose?"
E)  "We should probably price the extra-large version somewhere between $600 and $650."F) B) and E)
G) A) and C)

Question 2

At one point,people were willing to pay hundreds of dollars on eBay for a Beanie Baby toy that originally cost a small fraction of that.Today,those same Beanie Babies can be found at garage sales for less than a dollar apiece.This is most likely due to

Accepted Answer

A)  faulty craftsmanship in later production batches.
B)  a sharp downturn in the economy.
C)  the new,more nostalgic fad of bobblehead dolls.
D)  too many counterfeit Beanie Babies entering the country.
E)  a product becoming a fad and then losing its fad appeal.F) D) and E)
G) A) and D)

Question 3

A reference value involves comparing the costs and benefits of

Accepted Answer

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 manufacturer or distributor.
E)  intangible items.F) A) and B)
G) None of the above

Question 4

Elastic demand exists when

Accepted Answer

A)  a small percentage decrease in price produces a smaller percentage increase in quantity demanded.
B)  a small percentage decrease in price produces a larger percentage increase in quantity demanded.
C)  an increase in price causes a larger increase in quantity demanded.
D)  the quantity demanded remains the same regardless of level of price.
E)  no change in price produces a small percentage change in quantity demanded.F) A) and E)
G) A) and D)

Question 5

The competitive market situation in which many sellers compete on nonprice factors is referred to as

Accepted Answer

A)  a pure monopoly.
B)  an oligopoly.
C)  pure competition.
D)  monopolistic competition.
E)  monopolistic oligopoly.F) A) and B)
G) A) and C)

Question 6

Factors other than price affect demand.What are they and how do they work?

Accepted Answer

Price is not the complete story in estim...

Question 7

According to the profit equation,profit equals

Accepted Answer

A)  Total cost + Total revenue.
B)  Total revenue − Total cost.
C)  Marginal revenue − Marginal cost.
D)  Price × Quantity.
E)  Total revenue + Marginal cost.F) A) and D)
G) All of the above

Question 8

A firm's profit equals

Accepted Answer

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

Question 9

Figure 13-7
 
-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) B) and D)
G) None of the above

Question 10

An online movie streaming service charges $14.99 per month for its basic package.However,when a competitor introduced the same service at $13.99,the firm dropped its price to $13.99.The firm most likely made this price reduction in an attempt to

Accepted Answer

A)  decrease revenue but increase profit.
B)  increase profit by increasing revenue.
C)  maintain market share.
D)  decrease market share.
E)  increase efficiency.F) A) and E)
G) C) and D)

Question 11

Figure 13-7
 
-In the break-even chart in Figure 13-7 above,the line CG represents the firm's

Accepted Answer

A)  fixed costs.
B)  break-even point.
C)  variable costs.
D)  profit.
E)  total revenue.F) A) and D)
G) B) and C)

Question 12

Specifying the role of price in an organization's marketing and strategic plans is referred to as

Accepted Answer

A)  choosing a pricing plan.
B)  defining a profit mission.
C)  developing pricing constraints.
D)  setting pricing objectives.
E)  determining the list or quoted price.F) A) and B)
G) A) and C)

Question 13

Figure 13-7
 
-In the break-even chart in Figure 13-7 above,the triangular area FBE represents the firm's

Accepted Answer

A)  fixed costs.
B)  break-even point.
C)  variable costs.
D)  profit.
E)  total revenue.F) C) and E)
G) A) and B)

Question 14

What is the difference between fixed costs and variable costs?

Accepted Answer

Fixed cost is the sum of the expenses of...

Question 15

While pricing objectives frequently reflect corporate goals,pricing constraints often relate to

Accepted Answer

A)  stockholder demands.
B)  political ideology.
C)  conditions existing in the marketplace.
D)  an organization's code of ethics.
E)  the financial realities within the organization itself.F) B) and E)
G) C) and E)

Question 16

Pure competition is the competitive situation in which

Accepted Answer

A)  many sellers follow market price for identical,commodity products.
B)  one seller sets the price for a unique product.
C)  few sellers are sensitive to one another's prices.
D)  many sellers compete on nonprice factors.
E)  one or few sellers compete solely on nonprice factors.F) All of the above
G) B) and D)

Question 17

When estimating demand,price is not the only factor to be considered.Three other elements are emphasized by economists,one of which is

Accepted Answer

A)  consumer tastes.
B)  legislative changes.
C)  size of the target market.
D)  current political stability.
E)  promotional methods.F) A) and C)
G) A) and E)

Question 18

Which of the following is an example of a price?

Accepted Answer

A)  college tuition
B)  operating costs
C)  liquidity
D)  value
E)  stockholders' equityF) All of the above
G) D) and E)

Question 19

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

Accepted Answer

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

Question 20

Three different objectives relate to a firm's profit,each of which have different implications for pricing strategy.One of these is

Accepted Answer

A)  accumulating profits.
B)  reinvesting profits.
C)  redistributing profits.
D)  maximizing gross margin.
E)  achieving a target return.F) None of the above
G) A) and B)

Exam 13: Building the Price Foundation

Figure 13-7 -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

When estimating demand,price is not the only factor to be considered.Three other elements are emphasized by economists,one of which is

Correct AnswerverifiedShow Answer

An online movie streaming service charges $14.99 per month for its basic package.However,when a competitor introduced the same service at $13.99,the firm dropped its price to $13.99.The firm most likely made this price reduction in an attempt to

Correct AnswerverifiedShow Answer

While pricing objectives frequently reflect corporate goals,pricing constraints often relate to

Correct AnswerverifiedShow Answer

A reference value involves comparing the costs and benefits of

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Pure competition is the competitive situation in which

Correct AnswerverifiedShow Answer

Figure 13-7 -In the break-even chart in Figure 13-7 above,the line CG represents the firm's

Correct AnswerverifiedShow Answer

Elastic demand exists when

Correct AnswerverifiedShow Answer

Specifying the role of price in an organization's marketing and strategic plans is referred to as

Correct AnswerverifiedShow Answer

Three different objectives relate to a firm's profit,each of which have different implications for pricing strategy.One of these is

Correct AnswerverifiedShow Answer

At one point,people were willing to pay hundreds of dollars on eBay for a Beanie Baby toy that originally cost a small fraction of that.Today,those same Beanie Babies can be found at garage sales for less than a dollar apiece.This is most likely due to

Correct AnswerverifiedShow Answer

The competitive market situation in which many sellers compete on nonprice factors is referred to as

Correct AnswerverifiedShow Answer

Factors other than price affect demand.What are they and how do they work?

Correct AnswerverifiedPrice is not the complete story in estim...View AnswerShow Answer

Figure 13-7 -In the break-even chart in Figure 13-7 above,the triangular area FBE represents the firm's

Correct AnswerverifiedShow Answer

Which of the following statements would most likely be spoken while determining cost,volume,and profit relationships in the price-setting process?

Correct AnswerverifiedShow Answer

According to the profit equation,profit equals

Correct AnswerverifiedShow Answer

What is the difference between fixed costs and variable costs?

Correct AnswerverifiedFixed cost is the sum of the expenses of...View AnswerShow Answer

A firm's profit equals

Correct AnswerverifiedShow Answer

Which of the following is an example of a price?

Correct AnswerverifiedShow Answer

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Price is not the complete story in estim...
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Fixed cost is the sum of the expenses of...
View Answer

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