Question 1

Managing for long-run profits implies that a company will

Accepted Answer

A)  give up immediate profit in exchange for achieving a higher market share in hopes of penetrating competitive markets.
B)  maintain a given price range to ensure there is no loss of customers over time, even if the profit margin declines.
C)  invest excess cash in bonds and certificates of deposit in order to counteract any inflationary economic changes in the future.
D)  reinvest all profits into market research or product research rather than returned to shareholders.
E)  drop all products, product lines, or divisions that cannot maintain their pricing goals.F) A) and D)
G) B) and D)

Question 2

A firm's profit objective is often measured in terms of ROA. The acronym ROA stands for

Accepted Answer

A)  return on assets.
B)  risk opportunity assessment.
C)  return of allowances.
D)  return on average equity.
E)  risk opportunity analysis.F) C) and D)
G) All of the above

Question 3

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 4

Describe the pricing constraints a firm is likely to face.

Accepted Answer

Pricing constraints are factors that lim...

Question 5

Florida Power & Light, an electric power company, is the only source of electricity for consumers in most parts of the Florida panhandle. The company is __________, despite the fact that it must seek approval from the state utility commission for the rates it can charge.

Accepted Answer

A)  a free enterprise firm
B)  an oligopoly
C)  a monopolistic competitor
D)  a competitor in a pure competition
E)  a pure monopolyF) A) and B)
G) None of the above

Question 6

A recently graduated business student decided to open a small Internet café serving a variety of unusual nonalcoholic beverages from around the world. He carefully used all the pricing formulas he learned in school and set a goal to break even the first six months and make a moderate profit for the next six months, at which time he would review his pricing strategies. Within a week after opening, every seat was filled and he had to replenish his beverage orders several times. At his six-month review, he was devastated to find that despite huge sales, he had actually lost money. He realized it wasn't his math that was wrong; he forgot to include monthly expenses such as toilet paper, paper towels, and hand soap in his calculations. These costs should have appeared as __________ in his break-even analysis.

Accepted Answer

A)  fixed costs
B)  marginal costs
C)  variable costs
D)  overhead costs
E)  sunk costsF) A) and B)
G) None of the above

Question 7

List four key factors used to estimate demand.

Accepted Answer

Of course, price is one factor. Economis...

Question 8

Over time, Apple has had great latitude in setting and maintaining a premium price. Its long-term strategy was to have only a single model in a product line targeted at high-end users. However, lower-cost rival smartphones, many of which were powered by Google's Android operating system, entered the market. One concern for Apple is

Accepted Answer

A)  the ability to change prices quickly.
B)  speeding up the diffusion of innovation process.
C)  brand extension confusion.
D)  charging a lower price to gain a foothold in the market.
E)  the challenge of pricing a single product versus multiple products in an expanding product line.F) A) and E)
G) B) and C)

Question 9

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 10

The break-even point (BEP)  = [Fixed cost ÷ (__________ - Unit variable cost) ].

Accepted Answer

A)  Total cost
B)  Total expense
C)  Fixed cost
D)  Unit variable cost
E)  Unit priceF) None of the above
G) B) and E)

Question 11

According to the price equation, a product's or service's final price equals its list price minus incentives and allowances plus

Accepted Answer

A)  profits.
B)  commissions.
C)  trade-ins.
D)  extra fees.
E)  taxes.F) C) and D)
G) A) and E)

Question 12

Which of the following 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 C)
G) A) and D)

Question 13

The maximum quantity of products consumers will buy at given price is shown by

Accepted Answer

A)  a demand curve.
B)  a price constraint.
C)  a break-even point.
D)  a supply curve.
E)  a marginal revenue curve.F) C) and E)
G) All of the above

Question 14

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

Accepted Answer

A)  Generally, the greater the demand for a product, the higher the price that can be set.
B)  At the corporate level, when setting pricing constraints, a firm must disregard current conditions in the marketplace because they are too temporal for long-term planning.
C)  Pricing constraints must always be set, but they are rarely enforced.
D)  It is possible to create pricing constraints with the greatest range possible in order to anticipate any and all changes in the marketing environment.
E)  Even if a firm is trying to satisfy its obligations to its customers and society in general, it should ignore setting pricing constraints.F) A) and E)
G) B) and E)

Question 15

Factors that determine consumers' willingness and ability to pay for products and services are referred to as

Accepted Answer

A)  supply factors.
B)  demand factors.
C)  affordability factors.
D)  elasticity factors.
E)  macro environmental factors.F) A) and C)
G) A) and D)

Question 16

Rent, executive salaries, and insurance are typical examples of

Accepted Answer

A)  variable costs.
B)  fixed costs.
C)  unit costs.
D)  marginal costs.
E)  total costs.F) D) and E)
G) A) and B)

Question 17

The quantity at which total revenue and total cost are equal is referred to as

Accepted Answer

A)  the tipping point.
B)  the profitability point.
C)  incremental return on investment.
D)  the break-even point.
E)  sustainability.F) A) and C)
G) A) and B)

Question 18

Value-pricing refers to

Accepted Answer

A)  the ratio of perceived benefits to price.
B)  the money or other considerations exchanged for the ownership or use of a product or service.
C)  the practice of simultaneously increasing product and service benefits while maintaining or decreasing price.
D)  the ratio of price to perceived benefits.
E)  list price minus incentives and allowances plus extra fees.F) A) and E)
G) B) and D)

Question 19

What is the difference between a movement along a demand curve and a shift of a demand curve?

Accepted Answer

A movement along a demand curve assumes ...

Question 20

Many cosmetology schools allow their advanced students to style hair for "real-world" clients for a reduced fee. The students benefit from the experience, the clients get a less expensive haircut, and the school is able to provide students with additional training without costing it anything; in fact, they even profit from it. This is an example of

Accepted Answer

A)  value-pricing.
B)  societal pricing.
C)  revenue sharing.
D)  barter.
E)  cost-assist pricing.F) All of the above
G) A) and C)

Exam 13: Building the Price Foundation

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

Correct Answer
verified

The break-even point (BEP) = [Fixed cost ÷ (__________ - Unit variable cost) ].

Correct Answer
verified

Value-pricing refers to

Correct Answer
verified

The maximum quantity of products consumers will buy at given price is shown by

Correct Answer
verified

Factors that determine consumers' willingness and ability to pay for products and services are referred to as

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Describe the pricing constraints a firm is likely to face.

Correct Answer
verified
Pricing constraints are factors that lim...
View Answer

What is the difference between a movement along a demand curve and a shift of a demand curve?

Correct Answer
verified
A movement along a demand curve assumes ...
View Answer

A firm's profit objective is often measured in terms of ROA. The acronym ROA stands for

Correct Answer
verified

The quantity at which total revenue and total cost are equal is referred to as

Correct Answer
verified

According to the price equation, a product's or service's final price equals its list price minus incentives and allowances plus

Correct Answer
verified

Florida Power & Light, an electric power company, is the only source of electricity for consumers in most parts of the Florida panhandle. The company is __________, despite the fact that it must seek approval from the state utility commission for the rates it can charge.

Correct Answer
verified

List four key factors used to estimate demand.

Correct Answer
verified
Of course, price is one factor. Economis...
View Answer

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

Correct Answer
verified

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

Correct Answer
verified

Rent, executive salaries, and insurance are typical examples of

Correct Answer
verified

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

Correct Answer
verified
Price is not the complete story in estim...
View Answer

Correct Answer
verified

Managing for long-run profits implies that a company will

Correct Answer
verified

Exam 13: Building the Price Foundation

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

Correct AnswerverifiedShow Answer

The break-even point (BEP) = [Fixed cost ÷ (__________ - Unit variable cost) ].

Correct AnswerverifiedShow Answer

Value-pricing refers to

Correct AnswerverifiedShow Answer

The maximum quantity of products consumers will buy at given price is shown by

Correct AnswerverifiedShow Answer

Factors that determine consumers' willingness and ability to pay for products and services are referred to as

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Describe the pricing constraints a firm is likely to face.

Correct AnswerverifiedPricing constraints are factors that lim...View AnswerShow Answer

What is the difference between a movement along a demand curve and a shift of a demand curve?

Correct AnswerverifiedA movement along a demand curve assumes ...View AnswerShow Answer

A firm's profit objective is often measured in terms of ROA. The acronym ROA stands for

Correct AnswerverifiedShow Answer

The quantity at which total revenue and total cost are equal is referred to as

Correct AnswerverifiedShow Answer

According to the price equation, a product's or service's final price equals its list price minus incentives and allowances plus

Correct AnswerverifiedShow Answer

Florida Power & Light, an electric power company, is the only source of electricity for consumers in most parts of the Florida panhandle. The company is __________, despite the fact that it must seek approval from the state utility commission for the rates it can charge.

Correct AnswerverifiedShow Answer

List four key factors used to estimate demand.

Correct AnswerverifiedOf course, price is one factor. Economis...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Rent, executive salaries, and insurance are typical examples of

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

Correct AnswerverifiedShow Answer

Managing for long-run profits implies that a company will

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Pricing constraints are factors that lim...
View Answer

Correct Answer
verified
A movement along a demand curve assumes ...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Of course, price is one factor. Economis...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Price is not the complete story in estim...
View Answer

Correct Answer
verified

Correct Answer
verified