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Exam 13: Pricing Products and Services

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Question 141

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What were the first two questions that the bridge builders of the PEI Confederation Bridge wanted to know in order to accurately determine their pricing for using the bridge?

A) how many customers and how often
B) how many customers and how much they are willing to spend
C) how many day-to-day customers and how many tourists
D) how often and how much they are willing to spend

E) A) and D)
F) A) and C)

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Question 142

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Break-even analysis is:

A) a process that investigates the magnitude of difference between marginal revenue and marginal cost.
B) a method of determining just how much a consumer is willing to pay for a product or service.
C) a technique that analyzes the relationship between total revenue and total cost to determine profitability at various levels of output.
D) the process of determining the quantity of product consumers will buy relative to the quantity produced by the firm.

E) A) and D)
F) All of the above

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Question 143

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Inelastic demand exists when:

Many online items,such as games,downloadable software,and services (such as Dropbox) ,provide basic versions for free,although they have limited features and support.To get 24/7 support and all the features unlocked,the consumer must purchase the item.This strategy is referred to as:

A shift of the demand curve from D1 to D2 in Figure 13-5b indicates

The demand curve for which type of pricing method slopes downward and to the right,then turns back to the left?

At a price of $3 each,SHAPE magazine sells 1.25 million copies of its magazine targeted to young women seeking a healthier lifestyle.If the price per issue is increased to $3.25 each,only 1 million copies will be sold.Fixed costs are $1 million and unit variable costs are $0.50 per magazine.For the information provided here,what is SHAPE magazine's total revenue obtained at the lower price?

When microwave ovens were in the introduction stage of the product life cycle,some consumers were willing to pay exorbitant prices for the innovative ovens.Taking advantage of this strong consumer desire,marketers set the price for microwave ovens at the highest initial price that customers with a very strong desire for the product were willing to pay.Marketers of microwave ovens were using a _____ pricing strategy.

Figure: 13-5a -Figure 13-5a shows that when the price moves from $2.00 to $1.50 per unit,the quantity demanded

The use of flexible pricing has grown in popularity because of:

What are the four common approaches used by managers to help them find an approximate price level?

Washburn Guitars broke their guitars into four distinct market segments.Each segment would be priced accordingly.Their one-of-kind custom instruments were intended to appeal to

Ships Ahoy is a small company that makes model sailboat kits priced at $120 each.(There is no quantity discount.) The costs of the materials that go into each kit are $45.It costs $5 in labour 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 sailing and hobby magazines,and $3,500 for the monthly salary of its owner.If Ships Ahoy sells 150 kits in a given month,its monthly profit will be:

When you buy a Wilson Sting tennis racket from a discount store,you are offered the product at a single price.You can buy it or not,but there is no variation in price under the seller's:

A radio advertisement features a female buyer who is very enthusiastic about the pricing policies of the Saturn automobile dealers.In the testimonial-type advertisement,the car buyer laments about the difficulty she experienced with other car dealers in haggling over a final price for an auto.In comparison,the buyer touts the ease with which she arrived at a final price for her new Saturn automobile-she simply entered the showroom,asked for the price of the car she preferred,and the sales person quoted her the selling price.No matter which Saturn dealer she visited,the buyer (or any other buyer for that matter) would be quoted the same price for the same automobile.The advertisement represents Saturn's _____ policy.

The manager of a small gasoline station observes that while gasoline sales have been steady,the service side of the business has fallen off,and mechanics are often idle.He decides to offer a promotion - an oil change for $10 with a coupon mailed to 800 households in a 2-mile radius from his station.The $10 will just cover the costs of the oil change,and the cost of printing and mailing is $1,000.He hopes the promotion will increase regular maintenance service calls,which averages to $40.(Materials and labour per job cost $30.) If two hundred customers used the coupon,what will be the total cost of the promotion? (Disregard any opportunity costs.)

In which step of the price setting process would a new product manager be deciding whether to adopt a penetration or a skimming pricing strategy for a new product she is about to introduce to the market?

The quantity at which total revenue and total costs are equal is referred to as the:

When buyers and sellers are separated by vast distances,geographical adjustments may be made to reflect the cost of transportation of the products from sellers to buyers.Which method of quoting prices would be chosen by a seller who wants to maximize profits?

Each of the following is a true statement with respect to acting as a constraint on pricing EXCEPT: