Question 1

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) A) and B)
G) A) and C)

Question 2

A maximizing current profit objective implies that a company chooses to

Accepted Answer

A)  set targets whose performance can be measured quickly.
B)  give up immediate profit in exchange for achieving a higher market share in hopes of penetrating competitive markets.
C)  set a profit goal that is often determined by its board of directors.
D)  reduce investment in any further market or product research.
E)  set prices based on return on sales.F) All of the above
G) A) and C)

Question 3

Suppose you are the owner of a picture frame store and you wish to calculate how many frames you must sell to cover your fixed and variable costs at a given price. Let's assume that the demand for your frames is strong, so the average price customers are willing to pay for each picture frame is $120. Also, suppose your fixed costs (FC)  total $32,000 (real estate taxes, interest on a bank loan, etc.)  and unit variable cost (UVC)  for a picture frame is $40 (labor, glass, frame, and matting) . If your picture frame store sold 2,000 picture frames, what would your profit (or loss)  be?

Accepted Answer

A)  a loss of $32,000
B)  $0-just able to break even
C)  $32,000 profit
D)  $112,000 profit
E)  $128,000 profitF) B) and D)
G) A) and B)

Question 4

Acme Shoe Co. sells heel replacement kits for men's shoes. It has fixed costs of $6 million and unit variable costs of $5 per kit. Acme would like to earn a profit of $2 million. How many kits must Acme sell at a price of $15?

Accepted Answer

A)  100,000 kits
B)  400,000 kits
C)  600,000 kits
D)  800,000 kits
E)  1,400,000 kitsF) B) and E)
G) C) and D)

Question 5

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) None of the above
G) A) and E)

Question 6

The competitive market situation in which many sellers follow the market price for identical, commodity products is referred to as

Accepted Answer

A)  a pure monopoly.
B)  an oligopoly.
C)  a monopolistic competition.
D)  a pure competition.
E)  an oligopolistic competition.F) None of the above
G) A) and B)

Question 7

Demand curve refers to 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)  the quantity sold and price, which shows the minimum number of units that must be sold to break even.
C)  the quantity sold and price, 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.F) C) and E)
G) A) and C)

Question 8

The practice of simultaneously increasing product and service benefits while maintaining or decreasing price is referred to as

Accepted Answer

A)  value-pricing.
B)  customer-value pricing.
C)  competitive pricing.
D)  cost pricing.
E)  demand pricing.F) B) and C)
G) C) and D)

Question 9

Attorneys' fees, entrance fees, train fares, and organization dues are all examples of

Accepted Answer

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

Question 10

Economists have identified four types of competitive markets: oligopoly, monopolistic competition, pure competition, and

Accepted Answer

A)  capitalism.
B)  socialism.
C)  consumer-dominated.
D)  government-dominated.
E)  pure monopoly.F) None of the above
G) B) and D)

Question 11

The percentage change in quantity demanded relative to the percentage change in price is referred to as

Accepted Answer

A)  price elasticity of demand.
B)  demand derivative of price.
C)  average demand.
D)  marginal revenue.
E)  derived demand.F) All of the above
G) None of the above

Question 12

Estimating cost, conducting a marginal analysis, and performing a break-even analysis are issues that would be addressed during __________ of the price-setting process.

Accepted Answer

A)  Step 1
B)  Step 2
C)  Step 3
D)  Step 4
E)  Step 5F) C) and E)
G) None of the above

Question 13

All of the following statements are true about an oligopolistic competitive market situation except

Accepted Answer

A)  the products can be differentiated or undifferentiated.
B)  advertising that uses comparative (head-to-head)  messages is the norm.
C)  the purpose of advertising is to inform.
D)  sellers try to avoid price competition, which can lead to price wars.
E)  firms in these markets stay aware of a competitor's price cuts or increases and may follow suit.F) A) and D)
G) A) and E)

Question 14

List the following competitive markets from least competitive to most competitive.

Accepted Answer

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

Question 15

Which of the following statements about price elasticity of demand is most accurate?

Accepted Answer

A)  The more substitutes a product has, the more likely it is to be price elastic.
B)  All products show some price inelasticity.
C)  Nondiscretionary (necessary)  purchases are price elastic.
D)  With inelastic demand, reducing price has a very large impact on revenues.
E)  With inelastic demand, manufacturers change prices frequently to capitalize on consumer behavior.F) All of the above
G) B) and D)

Question 16

You have been asked to calculate the break-even point for a new line of T-shirts. 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) B) and E)
G) All of the above

Question 17

Which of the following statements regarding pricing objectives is most accurate?

Accepted Answer

A)  Pricing objectives should never change.
B)  Pricing objectives may change depending on the financial position of the company.
C)  Pricing objectives may change depending upon the relative market share of competitors.
D)  Pricing objectives are established exclusively by the marketing department.
E)  Pricing objectives are extremely sensitive to even the slightest change in the local economy.F) A) and B)
G) A) and C)

Question 18

Washburn Guitars markets its guitars to four distinct market segments. The firm's mass-produced instruments are targeted at

Accepted Answer

A)  first-time buyers.
B)  professional musicians.
C)  stars and famous musicians.
D)  guitar collectors and music aficionados.
E)  intermediate-skill players who may become professional musicians.F) A) and B)
G) A) and C)

Question 19

Demand for a product is likely to be more price elastic if it

Accepted Answer

A)  is considered a necessity.
B)  has many substitutes.
C)  has few substitutes.
D)  requires a small cash outlay.
E)  is nondiscretionary.F) B) and C)
G) None of the above

Question 20

If the price for Red Baron frozen cheese pizzas moves from $8 to $6 per unit along a demand curve D1, most likely the quantity demanded

Accepted Answer

A)  increases.
B)  decreases.
C)  stays the same.
D)  has no relationship to the price.
E)  could not be able to be plotted.F) C) and D)
G) B) and C)

Exam 13: Building the Price Foundation

Attorneys' fees, entrance fees, train fares, and organization dues are all examples of

Correct Answer
verified

Estimating cost, conducting a marginal analysis, and performing a break-even analysis are issues that would be addressed during __________ of the price-setting process.

Correct Answer
verified

If the price for Red Baron frozen cheese pizzas moves from $8 to $6 per unit along a demand curve D₁, most likely the quantity demanded

Correct Answer
verified

A demand curve graph typically appears as

Correct Answer
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Economists have identified four types of competitive markets: oligopoly, monopolistic competition, pure competition, and

Correct Answer
verified

Correct Answer
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Correct Answer
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Washburn Guitars markets its guitars to four distinct market segments. The firm's mass-produced instruments are targeted at

Correct Answer
verified

Which of the following statements about price elasticity of demand is most accurate?

Correct Answer
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Demand curve refers to a graph that relates

Correct Answer
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All of the following statements are true about an oligopolistic competitive market situation except

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

Correct Answer
verified

List the following competitive markets from least competitive to most competitive.

Correct Answer
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Acme Shoe Co. sells heel replacement kits for men's shoes. It has fixed costs of $6 million and unit variable costs of $5 per kit. Acme would like to earn a profit of $2 million. How many kits must Acme sell at a price of $15?

Correct Answer
verified

Demand for a product is likely to be more price elastic if it

Correct Answer
verified

The competitive market situation in which many sellers follow the market price for identical, commodity products is referred to as

Correct Answer
verified

A maximizing current profit objective implies that a company chooses to

Correct Answer
verified

The percentage change in quantity demanded relative to the percentage change in price is referred to as

Correct Answer
verified

Which of the following statements regarding pricing objectives is most accurate?

Correct Answer
verified

The practice of simultaneously increasing product and service benefits while maintaining or decreasing price is referred to as

Correct Answer
verified

Exam 13: Building the Price Foundation

Attorneys' fees, entrance fees, train fares, and organization dues are all examples of

Correct AnswerverifiedShow Answer

Estimating cost, conducting a marginal analysis, and performing a break-even analysis are issues that would be addressed during __________ of the price-setting process.

Correct AnswerverifiedShow Answer

If the price for Red Baron frozen cheese pizzas moves from $8 to $6 per unit along a demand curve D1, most likely the quantity demanded

Correct AnswerverifiedShow Answer

A demand curve graph typically appears as

Correct AnswerverifiedShow Answer

Economists have identified four types of competitive markets: oligopoly, monopolistic competition, pure competition, and

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Washburn Guitars markets its guitars to four distinct market segments. The firm's mass-produced instruments are targeted at

Correct AnswerverifiedShow Answer

Which of the following statements about price elasticity of demand is most accurate?

Correct AnswerverifiedShow Answer

Demand curve refers to a graph that relates

Correct AnswerverifiedShow Answer

All of the following statements are true about an oligopolistic competitive market situation except

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

List the following competitive markets from least competitive to most competitive.

Correct AnswerverifiedShow Answer

Acme Shoe Co. sells heel replacement kits for men's shoes. It has fixed costs of $6 million and unit variable costs of $5 per kit. Acme would like to earn a profit of $2 million. How many kits must Acme sell at a price of $15?

Correct AnswerverifiedShow Answer

Demand for a product is likely to be more price elastic if it

Correct AnswerverifiedShow Answer

The competitive market situation in which many sellers follow the market price for identical, commodity products is referred to as

Correct AnswerverifiedShow Answer

A maximizing current profit objective implies that a company chooses to

Correct AnswerverifiedShow Answer

The percentage change in quantity demanded relative to the percentage change in price is referred to as

Correct AnswerverifiedShow Answer

Which of the following statements regarding pricing objectives is most accurate?

Correct AnswerverifiedShow Answer

The practice of simultaneously increasing product and service benefits while maintaining or decreasing price is referred to as

Correct AnswerverifiedShow Answer

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If the price for Red Baron frozen cheese pizzas moves from $8 to $6 per unit along a demand curve D₁, most likely the quantity demanded

Correct Answer
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