Question 1

In the 1980s,typical round-trip coach airfares from the East Coast to London were more than $500.Then Freddie Laker introduced the People's Express,a competing service into Newark at $350.Major airlines matched his price-and continued to do so until they drove People's Express out of business.Then prices shot back up to over $500.A lawsuit filed under the Sherman Act resulted in the judgment that the major airlines had explicitly tried to destroy a competitor.The experience of People's Express is an example of ________ on the part of the major airlines.

Accepted Answer

A)  price fixing
B)  price discrimination
C)  deceptive pricing
D)  predatory pricing
E)  pricing constraintsF) B) and E)
G) A) and C)

Question 2

Many cruise lines pay the customer's airfare to the point of cruise departure.What type of price adjustment are the cruise lines using?

Accepted Answer

A)  skimming pricing
B)  promotional pricing
C)  loss-leader pricing
D)  prestige pricing
E)  uniform delivered pricingF) B) and C)
G) A) and E)

Question 3

The Robinson-Patman Act allows for price differentials to different customers under several conditions.Which of the following practices would be permitted?

Accepted Answer

A)  using price differentials when price differences charged to different customers do not exceed the differences in the cost of manufacture,sale,or delivery resulting from different methods or quantities in which such goods are sold or delivered to buyers
B)  using price differentials when price differences are given on the basis of other family businesses
C)  using price differentials when charging different prices to different buyers for goods of like grade or quality
D)  using price differentials when charging different prices on the basis of religious affiliation
E)  using price differentials when charging the original price for refurbished goods that have been damaged or used and returned but repaired according to company specificationsF) A) and D)
G) D) and E)

Question 4

Figure 14-3
 
-Figure 14-3 above shows a demand curve depicting which pricing approach?

Accepted Answer

A)  prestige pricing
B)  skimming pricing
C)  penetration pricing
D)  price lining
E)  reflexive pricingF) A) and D)
G) D) and E)

Question 5

In some cases,penetration pricing may follow which pricing strategy?

Accepted Answer

A)  experience curve
B)  target ROI
C)  odd-even
D)  above market
E)  skimmingF) B) and D)
G) B) and C)

Question 6

Charging different prices to maximize revenue for a set amount of capacity at any given time is referred to as

Accepted Answer

A)  demand backward pricing.
B)  target pricing.
C)  skimming pricing.
D)  yield management pricing.
E)  penetration pricing.F) A) and D)
G) A) and B)

Question 7

If a firm estimates that its costs will fall by 10 percent each time volume doubles for its product,then the cost of the l,000th unit produced and sold will be about 90 percent of the cost of the 500th unit,and the 2,000th unit will be 90 percent of the l,000th unit.Therefore,if the cost of the 500th unit is $100,the cost of the 4,000th unit would be

Accepted Answer

A)  $0.
B)  $72.90.
C)  $81.00.
D)  $90.00.
E)  $100.00.F) A) and B)
G) D) and E)

Question 8

Figure 14-4
 
-Figure 14-4 above illustrates which type of pricing approach?

Accepted Answer

A)  skimming
B)  penetration
C)  cost-plus
D)  price lining
E)  prestigeF) B) and D)
G) A) and B)

Question 9

Bundle pricing refers to

Accepted Answer

A)  an extra amount of "free goods" awarded sellers in the channel of distribution for promoting a product.
B)  marketing two or more products in a single package price.
C)  using BOGOs-requiring customers to "buy one to get one free" as a strategy to increase sales and profits.
D)  setting the price of a line of products at two specific pricing points.
E)  the practice of charging two or more prices depending upon the outlet carrying the product.F) A) and B)
G) A) and E)

Question 10

What are the conditions favoring the use of penetration pricing?

Accepted Answer

The conditions favoring penetration pric...

Question 11

Swedish company Asko,which prides itself on manufacturing and marketing some of the best-built and most prestigious appliances in the world,would most likely use which competition-oriented pricing approach?

Accepted Answer

A)  customary pricing
B)  above-market pricing
C)  loss-leader pricing
D)  target profit pricing
E)  penetration pricingF) B) and C)
G) A) and B)

Question 12

A custom tailor wishes to use target profit pricing to establish a price for a custom-designed business suit.Assume variable cost is $200 per suit,fixed cost is $44,000,and the target profit is $50,000 based on a volume of 50 suits.What price should be charged for a typical custom suit?

Accepted Answer

A)  $520
B)  $1,040
C)  $1,880
D)  $2,080
E)  $10,000F) B) and C)
G) None of the above

Question 13

Prestige pricing is considered to be a ________ approach to pricing.

Accepted Answer

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

Question 14

Creative Quilts Studio sells hundreds of colors and types of fabric and thread.To price its inventory,the owners add 50 percent to the cost of each bolt of fabric and every spool of thread.What is this pricing approach called?

Accepted Answer

A)  target return-on-sales pricing
B)  flexible pricing
C)  cost-plus pricing
D)  standard markup pricing
E)  customary pricingF) C) and D)
G) B) and E)

Question 15

A price reduction given when a used product is part of the payment on a new product is referred to as a

Accepted Answer

A)  cash discount.
B)  seasonal discount.
C)  trade-in allowance.
D)  promotional allowance.
E)  subsidy discount.F) All of the above
G) C) and D)

Question 16

Which of the following statements regarding price lining is most accurate?

Accepted Answer

A)  In order for price lining to be effective,there should be at least five specified price points.
B)  Price lining assumes that demand is inelastic at each price point but elastic between price points.
C)  Price lining assumes that demand is elastic at each price point but inelastic between price points.
D)  Price lining is the preferred pricing strategy for governmental contracts.
E)  Price lining is the same as above-,at-,or below-market pricing.F) A) and D)
G) A) and B)

Question 17

Target pricing is considered to be a ________ approach to pricing.

Accepted Answer

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

Question 18

Deceptive pricing practices are outlawed by legislation and enforced by which federal agency?

Accepted Answer

A)  Consumer Protection Agency
B)  U) S.Department of Justice
C)  Federal Communications Commission
D)  U) S.Department of Commerce
E)  Federal Trade CommissionF) A) and D)
G) B) and D)

Question 19

Japanese,Korean,and U.S.firms in the electronics industry often adopt which cost-oriented pricing approach,one that complements the demand-oriented pricing strategy of skimming followed by penetration pricing?

Accepted Answer

A)  cost-plus-percentage-of-cost pricing
B)  cost-plus-fixed-fee pricing
C)  standard markup pricing
D)  derived demand pricing
E)  experience curve pricingF) B) and C)
G) C) and E)

Question 20

If demand for a class of products is elastic at a number of price points but is inelastic between these price points,which pricing approach should be chosen?

Accepted Answer

A)  product-line pricing
B)  skimming pricing
C)  penetration pricing
D)  price lining
E)  odd-even pricingF) C) and D)
G) A) and B)

Exam 14: Arriving at the Final Price

Creative Quilts Studio sells hundreds of colors and types of fabric and thread.To price its inventory,the owners add 50 percent to the cost of each bolt of fabric and every spool of thread.What is this pricing approach called?

Correct Answer
verified

What are the conditions favoring the use of penetration pricing?

Correct Answer
verified
The conditions favoring penetration pric...
View Answer

Many cruise lines pay the customer's airfare to the point of cruise departure.What type of price adjustment are the cruise lines using?

Correct Answer
verified

A price reduction given when a used product is part of the payment on a new product is referred to as a

Correct Answer
verified

Which of the following statements regarding price lining is most accurate?

Correct Answer
verified

Bundle pricing refers to

Correct Answer
verified

In some cases,penetration pricing may follow which pricing strategy?

Correct Answer
verified

Deceptive pricing practices are outlawed by legislation and enforced by which federal agency?

Correct Answer
verified

If demand for a class of products is elastic at a number of price points but is inelastic between these price points,which pricing approach should be chosen?

Correct Answer
verified

Prestige pricing is considered to be a ________ approach to pricing.

Correct Answer
verified

Charging different prices to maximize revenue for a set amount of capacity at any given time is referred to as

Correct Answer
verified

Target pricing is considered to be a ________ approach to pricing.

Correct Answer
verified

Swedish company Asko,which prides itself on manufacturing and marketing some of the best-built and most prestigious appliances in the world,would most likely use which competition-oriented pricing approach?

Correct Answer
verified

The Robinson-Patman Act allows for price differentials to different customers under several conditions.Which of the following practices would be permitted?

Correct Answer
verified

Correct Answer
verified

A custom tailor wishes to use target profit pricing to establish a price for a custom-designed business suit.Assume variable cost is $200 per suit,fixed cost is $44,000,and the target profit is $50,000 based on a volume of 50 suits.What price should be charged for a typical custom suit?

Correct Answer
verified

Correct Answer
verified

Japanese,Korean,and U.S.firms in the electronics industry often adopt which cost-oriented pricing approach,one that complements the demand-oriented pricing strategy of skimming followed by penetration pricing?

Correct Answer
verified

Figure 14-3 -Figure 14-3 above shows a demand curve depicting which pricing approach?

Correct Answer
verified

Figure 14-4 -Figure 14-4 above illustrates which type of pricing approach?

Correct Answer
verified

Exam 14: Arriving at the Final Price

Creative Quilts Studio sells hundreds of colors and types of fabric and thread.To price its inventory,the owners add 50 percent to the cost of each bolt of fabric and every spool of thread.What is this pricing approach called?

Correct AnswerverifiedShow Answer

What are the conditions favoring the use of penetration pricing?

Correct AnswerverifiedThe conditions favoring penetration pric...View AnswerShow Answer

Many cruise lines pay the customer's airfare to the point of cruise departure.What type of price adjustment are the cruise lines using?

Correct AnswerverifiedShow Answer

A price reduction given when a used product is part of the payment on a new product is referred to as a

Correct AnswerverifiedShow Answer

Which of the following statements regarding price lining is most accurate?

Correct AnswerverifiedShow Answer

Bundle pricing refers to

Correct AnswerverifiedShow Answer

In some cases,penetration pricing may follow which pricing strategy?

Correct AnswerverifiedShow Answer

Deceptive pricing practices are outlawed by legislation and enforced by which federal agency?

Correct AnswerverifiedShow Answer

If demand for a class of products is elastic at a number of price points but is inelastic between these price points,which pricing approach should be chosen?

Correct AnswerverifiedShow Answer

Prestige pricing is considered to be a ________ approach to pricing.

Correct AnswerverifiedShow Answer

Charging different prices to maximize revenue for a set amount of capacity at any given time is referred to as

Correct AnswerverifiedShow Answer

Target pricing is considered to be a ________ approach to pricing.

Correct AnswerverifiedShow Answer

Swedish company Asko,which prides itself on manufacturing and marketing some of the best-built and most prestigious appliances in the world,would most likely use which competition-oriented pricing approach?

Correct AnswerverifiedShow Answer

The Robinson-Patman Act allows for price differentials to different customers under several conditions.Which of the following practices would be permitted?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A custom tailor wishes to use target profit pricing to establish a price for a custom-designed business suit.Assume variable cost is $200 per suit,fixed cost is $44,000,and the target profit is $50,000 based on a volume of 50 suits.What price should be charged for a typical custom suit?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Japanese,Korean,and U.S.firms in the electronics industry often adopt which cost-oriented pricing approach,one that complements the demand-oriented pricing strategy of skimming followed by penetration pricing?

Correct AnswerverifiedShow Answer

Figure 14-3 -Figure 14-3 above shows a demand curve depicting which pricing approach?

Correct AnswerverifiedShow Answer

Figure 14-4 -Figure 14-4 above illustrates which type of pricing approach?

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified
The conditions favoring penetration pric...
View Answer

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