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Exam 11: Pricing Products and Services

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Question 161

Multiple Choice

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When Dell sells various laptops, it also pre-installs Microsoft Office and other software customers order at a discount before a laptop is shipped. This is an example of

A) price lining.
B) product line pricing.
C) bundle pricing.
D) customary pricing.
E) prestige pricing.

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

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Question 162

Multiple Choice

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

A) tipping point.
B) profitability point.
C) incremental return on investment.
D) break-even point.
E) zero margin.

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

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Question 163

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Mike Morgan, a sales representative for a major food service distributor of Betty Crocker's Warm Delights, wanted to encourage larger purchases by supermarkets and mass merchandisers. In order to accomplish this objective, Morgan offered the following discounts to his customers: a 10 percent discount for buying 1-49 cases of Warm Delights within a calendar month. The discount increases to 12 percent if 50-99 cases of Warm Delights are purchased and to 15 percent if 100 or more cases of Warm Delights are purchased within the same calendar month. What type of discount was Morgan offering his customers?

In the early 1980s, typical round-trip coach airfares from the East Coast to London were more than $500. Then Freddie Laker introduced the People's Express, a competing service into Newark at $350. Major airlines matched his price and did so until they drove People's Express out of business. Then prices shot back up to over $500. A lawsuit filed under the Sherman Act resulted in a judgment that the major airlines had explicitly tried to destroy a competitor. The People's Express case is an example of __________ on the part of the major airlines.

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

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. Tim 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 Tim charges for each of his clocks is $40, what is his break-even point quantity?

Consumers buy water and soda from vending machines. Traditionally, the price of each of these products is about $1.25. If a marketer charges a significantly higher price for such products dispensed by vending machines, such as $2.00 per item, sales are likely to decline. Thus marketers tend to be very consistent in the prices they charge for vending machine products. This is an example of marketers employing a __________ strategy.

All of the following are synonyms for price EXCEPT:

The price-setting process includes identifying pricing objectives and constraints. Describe the reasons these objectives may change and give examples of objectives a firm may set.

Flexible Pricing Chart -Consider the flexible pricing chart above, which shows the results of a National Bureau of Economic Research study of 750,000 car purchases. The data indicate that some groups of car buyers, on average, paid roughly $105, $423, and $483 respectively for a new car in the $21,000 range than the typical purchaser. Who are the car buyers in column A?

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, is purchased by many consumers because it contains no calories. This situation involves the consumer considering

Explain the price equation in the context of a new car purchase.

Total revenue refers to

Barter refers to

-In Figure 11-6 above, which is a break-even chart that depicts a graphic presentation of a break-even analysis for a picture frame store, the triangular area FBE represents the firm's

What is critical when using target profit pricing?

The total money received from the sale of a product is referred to as __________.

-Figure 11-3A above shows that when the quantity demanded for Red Baron frozen cheese pizzas moves from 2 to 3 million units along the demand curve D₁, the profit

What is the difference between and EDLP retailer and a High-Low retailer? Why does Carmex charge them a different price?

Explain why odd-even pricing may be successful.