Question 1

According to the price equation,final price equals list price minus __________ plus extra fees.

Accepted Answer

A)   profits
B)   commissions
C)   trade-ins
D)   taxes
E)   incentives and allowancesF) A) and C)
G) B) and E)

Question 2

Three different objectives relate to a firm's profit,which is often measured in terms of return on investment.One objective,known as _________,occurs when a firm sets a profit goal,usually determined by its board of directors.

Accepted Answer

A)   maximizing current profit
B)   managing for long-run profits
C)   target return
D)   break-even strategy
E)   minimizing riskF) A) and E)
G) B) and C)

Question 3

Which of the following is a typical example of a fixed cost?

Accepted Answer

A)   taxes
B)   raw materials
C)   sales commissions
D)   building rental expense
E)   hourly wagesF) A) and C)
G) A) and D)

Question 4

The ratio of the firm's sales revenues or unit sales to those of the industry (competitors plus the firm itself) is referred to as

Accepted Answer

A)   target return on sales.
B)   industry profit.
C)   unit volume.
D)   market share.
E)   profit.F) C) and D)
G) A) and E)

Question 5

Setting a high price so that quality- or status-conscious consumers will be attracted to the product and buy it is referred to as

Accepted Answer

A)   skimming pricing.
B)   status pricing.
C)   price lining.
D)   value pricing.
E)   prestige pricing.F) A) and B)
G) B) and E)

Question 6

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 E)
G) None of the above

Question 7

Bundle pricing refers to

Accepted Answer

A)   an extra amount of "free goods" awarded to 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) C) and D)
G) A) and E)

Question 8

Tara is enrolled for spring semester at college.The tuition is $6,000,but she has a scholarship for $1,000 as well as a work-study grant of $1 ,500.The health fees and student activity fees are $150 for the semester.What is the final price that Tara will pay for the spring semester?

Accepted Answer

A)   $2,500
B)   $2,650
C)   $3,150
D)   $3,650
E)   $6,150F) A) and B)
G) C) and D)

Question 9

A negative aspect of selecting unit volume as a pricing objective is that

Accepted Answer

A)   production often cannot keep up with demand.
B)   there are increased carrying costs with extensive inventories.
C)   if price reductions are used to achieve volume objectives, it can sometimes come at the expense of profits.
D)   it can create competition between divisions within the organization itself, causing conflicts over the allocation of resources.
E)   it always positively correlates with a sales revenue objective.F) None of the above
G) C) and D)

Question 10

The practice of charging different prices to different buyers for goods of like grade and quality is referred to as

Accepted Answer

A)   horizontal price-fixing.
B)   resale price maintenance.
C)   price discrimination.
D)   predatory pricing.
E)   bait and switch pricing.F) A) and E)
G) A) and D)

Question 11

Cost-plus pricing refers to

Accepted Answer

A)   summing the total unit cost of providing a product or service and adding a specific amount to the cost to arrive at the price.
B)   setting the price of a line of products at a number of different price points.
C)   adding a fixed percentage to the cost of all items in a specific product class.
D)   setting prices to achieve a profit that is a specified percentage of the sales volume.
E)   increasing the price slightly to protect against undue profit losses from unforeseen environmental forces.F) A) and D)
G) A) and C)

Question 12

Give an example of yield management pricing and explain why it is used.

Accepted Answer

Yield management pricing is charging dif...

Question 13

If you were to buy one peach tree and one apple tree from the Stark Bros.fruit trees and landscaping catalog in two separate orders,you would pay a total of $109.09.99.However,if you order the peach and apple tree together in the same order,you pay only
$89) 99 each.When selling the two trees together for a reduced price,what pricing strategy does Stark Bros.employ?

Accepted Answer

A)   product-line pricing
B)   prestige pricing
C)   price lining
D)   discount pricing
E)   bundle pricingF) B) and E)
G) A) and D)

Question 14

Trade discounts are offered to resellers in the marketing channel on the basis of the marketing activities they are expected to perform in the future and

Accepted Answer

A)   the frequency of the order.
B)   where they are in the channel.
C)   when orders are placed during the year.
D)   the length of the relationship with the manufacturer.
E)   the size of the order.F) A) and C)
G) A) and B)

Question 15

Assume it costs Lady Marion Seafood,Inc.,$30 to catch,process,freeze,package,and ship five-pound packages of Alaskan salmon.The firm adds 60 percent to the cost of its salmon products and charges customers a total of $48 for a postage-paid,vacuum-sealed package.What type of pricing does Lady Marion Seafood use to arrive at its final price?

Accepted Answer

A)   target return-on-sales pricing
B)   bundle pricing
C)   standard markup pricing
D)   target profit pricing
E)   customary pricingF) C) and D)
G) A) and E)

Question 16

When buying highly technical,few-of-a-kind products such as hydroelectric power plants,governments have found that general contractors are reluctant to specify a formal,fixed price for the procurement.Therefore,these contractors use __________ to compensate them for any cost overruns.

Accepted Answer

A)   at-market pricing
B)   experience curve pricing
C)   cost-plus-fixed-fee pricing
D)   standard markup pricing
E)   yield management pricingF) A) and E)
G) None of the above

Question 17

The practice of charging a very low price for a product with the intent of driving competitors out of business is referred to as

Accepted Answer

A)   price fixing.
B)   predatory pricing.
C)   price discrimination.
D)   deceptive pricing.
E)   geographical pricing.F) D) and E)
G) A) and B)

Question 18

Allowances,like discounts,are

Accepted Answer

A)   rewards given to retailers to encourage early payment.
B)   payment extensions given to cash-strapped consumers during the current recession.
C)   list price deductions based on surges in consumer demand.
D)   list price deductions based on sudden drops in consumer demand.
E)   reductions from list or quoted prices to buyers for performing some activity.F) A) and B)
G) D) and E)

Question 19

In the purchase of the sugar substitute Splenda,you may compare it to something you know about like real sugar.Although Splenda is more expensive than sugar,it is purchased by many consumers because it contains no calories.This situation involves the consumer considering

Accepted Answer

A)   a marginal analysis.
B)   a profit equation.
C)   a break-even analysis.
D)   price elasticity of demand.
E)   a reference value.F) B) and D)
G) B) and E)

Question 20

In response to Duracell's introduction of the Duracell Ultra battery,Energizer introduced an Advanced Formula battery.But unlike Duracell,Energizer priced its battery at a low initial price to attract the mass market.Was Energizer's pricing strategy to take market share from Duracell a success?

Accepted Answer

A)   No, because consumers are price-insensitive when it comes to batteries.
B)   Yes, because of the positive association with the "Energizer Bunny" marketing campaign.
C)   No, because consumers suspected inferior quality due to the low price.
D)   Yes, because consumers typically respond positively to cost-plus pricing.
E)   Yes, because the demand for batteries has unitary elasticity.F) A) and D)
G) None of the above

Exam 11: Pricing Products and Services

Correct Answer
verified

In response to Duracell's introduction of the Duracell Ultra battery,Energizer introduced an Advanced Formula battery.But unlike Duracell,Energizer priced its battery at a low initial price to attract the mass market.Was Energizer's pricing strategy to take market share from Duracell a success?

Correct Answer
verified

Tara is enrolled for spring semester at college.The tuition is $6,000,but she has a scholarship for $1,000 as well as a work-study grant of $1 ,500.The health fees and student activity fees are $150 for the semester.What is the final price that Tara will pay for the spring semester?

Correct Answer
verified

Three different objectives relate to a firm's profit,which is often measured in terms of return on investment.One objective,known as _________,occurs when a firm sets a profit goal,usually determined by its board of directors.

Correct Answer
verified

According to the price equation,final price equals list price minus __________ plus extra fees.

Correct Answer
verified

Cost-plus pricing refers to

Correct Answer
verified

Which of the following is a typical example of a fixed cost?

Correct Answer
verified

Bundle pricing refers to

Correct Answer
verified

Correct Answer
verified

Setting a high price so that quality- or status-conscious consumers will be attracted to the product and buy it is referred to as

Correct Answer
verified

The practice of charging a very low price for a product with the intent of driving competitors out of business is referred to as

Correct Answer
verified

Trade discounts are offered to resellers in the marketing channel on the basis of the marketing activities they are expected to perform in the future and

Correct Answer
verified

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

Correct Answer
verified

The ratio of the firm's sales revenues or unit sales to those of the industry (competitors plus the firm itself) is referred to as

Correct Answer
verified

Allowances,like discounts,are

Correct Answer
verified

The practice of charging different prices to different buyers for goods of like grade and quality is referred to as

Correct Answer
verified

In the purchase of the sugar substitute Splenda,you may compare it to something you know about like real sugar.Although Splenda is more expensive than sugar,it is purchased by many consumers because it contains no calories.This situation involves the consumer considering

Correct Answer
verified

When buying highly technical,few-of-a-kind products such as hydroelectric power plants,governments have found that general contractors are reluctant to specify a formal,fixed price for the procurement.Therefore,these contractors use __________ to compensate them for any cost overruns.

Correct Answer
verified

Give an example of yield management pricing and explain why it is used.

Correct Answer
verified
Yield management pricing is charging dif...
View Answer

A negative aspect of selecting unit volume as a pricing objective is that

Correct Answer
verified

Exam 11: Pricing Products and Services

Correct AnswerverifiedShow Answer

In response to Duracell's introduction of the Duracell Ultra battery,Energizer introduced an Advanced Formula battery.But unlike Duracell,Energizer priced its battery at a low initial price to attract the mass market.Was Energizer's pricing strategy to take market share from Duracell a success?

Correct AnswerverifiedShow Answer

Tara is enrolled for spring semester at college.The tuition is $6,000,but she has a scholarship for $1,000 as well as a work-study grant of $1 ,500.The health fees and student activity fees are $150 for the semester.What is the final price that Tara will pay for the spring semester?

Correct AnswerverifiedShow Answer

Three different objectives relate to a firm's profit,which is often measured in terms of return on investment.One objective,known as _________,occurs when a firm sets a profit goal,usually determined by its board of directors.

Correct AnswerverifiedShow Answer

According to the price equation,final price equals list price minus __________ plus extra fees.

Correct AnswerverifiedShow Answer

Cost-plus pricing refers to

Correct AnswerverifiedShow Answer

Which of the following is a typical example of a fixed cost?

Correct AnswerverifiedShow Answer

Bundle pricing refers to

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Setting a high price so that quality- or status-conscious consumers will be attracted to the product and buy it is referred to as

Correct AnswerverifiedShow Answer

The practice of charging a very low price for a product with the intent of driving competitors out of business is referred to as

Correct AnswerverifiedShow Answer

Trade discounts are offered to resellers in the marketing channel on the basis of the marketing activities they are expected to perform in the future and

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The ratio of the firm's sales revenues or unit sales to those of the industry (competitors plus the firm itself) is referred to as

Correct AnswerverifiedShow Answer

Allowances,like discounts,are

Correct AnswerverifiedShow Answer

The practice of charging different prices to different buyers for goods of like grade and quality is referred to as

Correct AnswerverifiedShow Answer

In the purchase of the sugar substitute Splenda,you may compare it to something you know about like real sugar.Although Splenda is more expensive than sugar,it is purchased by many consumers because it contains no calories.This situation involves the consumer considering

Correct AnswerverifiedShow Answer

When buying highly technical,few-of-a-kind products such as hydroelectric power plants,governments have found that general contractors are reluctant to specify a formal,fixed price for the procurement.Therefore,these contractors use __________ to compensate them for any cost overruns.

Correct AnswerverifiedShow Answer

Give an example of yield management pricing and explain why it is used.

Correct AnswerverifiedYield management pricing is charging dif...View AnswerShow Answer

A negative aspect of selecting unit volume as a pricing objective is that

Correct AnswerverifiedShow Answer

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verified
Yield management pricing is charging dif...
View Answer

Correct Answer
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