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Managing for long-run profits as a pricing objective implies that a company will


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 C)
G) B) and E)

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Unit volume as a pricing objective refers to


A) the quantity of products to be produced or sold.
B) the ratio of price per unit to unit variable cost.
C) the ratio of production costs to the minimum sales price that would still generate profit.
D) the total quantity of product sold by a firm relative to the total quantity of product sold by all firms in the industry.
E) variable cost expressed on a per unit basis for a product.

F) A) and B)
G) B) and E)

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Which of the following statements regarding odd-even pricing is most accurate?


A) Odd-even pricing is designed to give the consumer a better set of pricing alternatives.
B) Odd-even pricing can be used in conjunction with a skimming pricing strategy, but should not be used with a penetration pricing strategy.
C) Odd-even pricing does not work if the product is health care-related.
D) Overuse of odd-even prices tends to mute its effect on demand.
E) Odd-even prices are best used with large ticket items; it loses its effectiveness with moderate- to low-ticket items.

F) C) and D)
G) A) and B)

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Explain predatory pricing.

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Predatory pricing is the practice of cha...

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________ is among several pricing practices that are closely scrutinized because of potential unethical or illegal actions.


A) Predatory pricing
B) Price discounting
C) Lateral price fixing
D) Regional rollbacks
E) Delayed payment penalties

F) B) and C)
G) C) and E)

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In some cases,penetration pricing may follow skimming pricing.The skimming pricing would help __________ and the penetration pricing would help __________.


A) increase market share; attract price-insensitive customers
B) attract price-sensitive customers; increase market share
C) recoup initial research and development costs; increase market share
D) recoup initial research and development costs; improve firm reputation
E) increase market share; attract price insensitive customers

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

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What type of discount would Toro,a domestic yard machinery company,most likely offer its channel members to carry and sell its riding lawn mowers during the winter?


A) quantity discounts
B) distribution discounts
C) trade discounts
D) seasonal discounts
E) functional discounts

F) A) and B)
G) B) and D)

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Predatory pricing refers to


A) the practice of charging a very low price for a product with the intent of driving competitors out of business.
B) a conspiracy among firms to set prices for a product.
C) using price differentials when charging different prices on the basis of race, religion, or ethnic affiliation.
D) using price differentials when charging the original price for refurbished goods that have been damaged or used and returned but repaired according to company specifications.
E) controlling agreements between independent buyers and sellers whereby sellers are required to not sell products below a minimum retail price.

F) All of the above
G) B) and E)

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Suppose you are the owner of a picture frame store and you wish to calculate how many pictures you must sell to cover your fixed and variable costs at a given price.Demand for pictures is strong,so the average price customers are willing to pay for each picture frame is $120.20.20.20.20.20.20.20.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) .What is the quantity of picture frames you will need to sell to break-even?


A) 200 picture frames
B) 400 picture frames
C) 800 picture frames
D) 1,600 picture frames
E) 2,000 picture frames

F) A) and D)
G) A) and E)

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Demand-oriented approaches weigh factors that underlie expected __________ more heavily than such factors as cost,profit,and competition when selecting a price level.


A) total revenue
B) stakeholder concerns
C) prevailing prices
D) product substitutes
E) customer tastes

F) C) and D)
G) B) and C)

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To accommodate the changes in the book selling market,publishers changed their pricing approach so that


A) rebates could be paid to the bookstores.
B) readers would pay more so that distributors would continue to profit.
C) distributors would no longer make a profit on every e-book sold.
D) distributors would get a commission on every e-book sold.
E) eventually e-books would be free to distribute.

F) A) and D)
G) A) and C)

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Companies use a price premium to assess whether their products and brands are priced above,at,or below the market.More specifically,a price premium is the percentage by which the actual price charged for a specific brand exceeds or falls short of a benchmark established for a similar product or basket of products.This price premium equals


A) unit volume market share for a brand, divided by dollar sales market share for a brand, minus one.
B) dollar sales market share for a brand, divided by unit volume market share for a brand, plus one
C) dollar sales market share for a brand, divided by unit volume market share for a brand, minus one..
D) dollar sales market share for a brand, divided by unit volume market share for a brand, plus one.
E) dollar sales market share for a brand, divided by unit volume market share for a brand, minus the number of competitors against which a brand is being measured.

F) B) and C)
G) A) and E)

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Most consumers realize that the quality of diamonds varies,and most believe the higher the price of a diamond,the higher its quality.This is an example of price influencing the perception of overall quality and therefore __________ to consumers.


A) acceptable cost
B) perceptual investment
C) barter potential
D) return on investment
E) value

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

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Break-even analysis refers to


A) a process that investigates the 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) the graph that shows the maximum number of products consumers will buy at a given price.

F) B) and C)
G) A) and E)

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Which of the following statements is most accurate?


A) Nonprofit organizations are exempt from having to cover the costs of producing and/or marketing their products.
B) Socially responsible corporations should have the pricing constraint of covering all costs of producing and marketing their products, but they should not price their products to earn a profit.
C) Marketers must ensure that firms in their channels of distribution make an adequate profit or they will be cut off from their customers.
D) Price elasticity of demand makes it virtually impossible for companies to cover all their marketing and production costs at all times.
E) Marketing and production costs are the most difficult and expensive aspect of pricing because they draw so much capital away from other departments in the organization.

F) B) and C)
G) D) and E)

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Which of the following statements regarding a market share pricing objective is most accurate?


A) A market share objective is often difficult for product managers since stockholders are looking for immediate dividends (return of profits) .
B) Although increased market share is a primary goal of some firms, others see it as a means to other ends, such as increased sales or profits.
C) Selecting market share as a pricing objective is particularly effective if industry sales are rising.
D) An advantage of market share as a pricing objective is that it is particularly insensitive to competitors' actions.
E) Ironically, a market share objective is realized by raising prices in order to increase consumer confidence during the decline stage of a product's life cycle.

F) D) and E)
G) A) and B)

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If you know the contents and price of a McDonald's Extra Value Meal,it may serve as __________ to you when you visit other fast food restaurants and consider the purchase of a meal option there.


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

F) C) and D)
G) A) and D)

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The practice of exchanging products and services for other products and services rather than for money is referred to as


A) barter.
B) reciprocal pricing.
C) virtual pricing.
D) balance of payments.
E) value-pricing.

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

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Tim Marlow,the owner of The Clock Works,wanted to know how many clocks he must sell in order to cover his fixed cost at a given price.Marlow knew that he had total fixed costs of $20,000 for equipment,taxes,and a bank loan.He also had a unit variable cost of $20 per clock for labor and materials.If the price Marlow charges for each of his clocks is $40,what is his break-even point quantity?


A) 100 clocks
B) 334 clocks
C) 500 clocks
D) 1,000 clocks
E) 10,000 clocks

F) B) and E)
G) All of the above

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The practice of replacing promotional allowances with lower manufacturer list prices is referred to as


A) everyday low pricing.
B) everyday fair pricing.
C) trade-in allowances.
D) markdown pricing.
E) everyday value pricing.

F) D) and E)
G) A) and B)

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