Question 1

Which of the following types of organization is a good source of consumer credit information?

Accepted Answer

A)  Trade-credit agencies 
B)  Third-party reports 
C)  The Federal Credit Reporting Agency 
D)  Credit bureaus 
A)  Trade-credit agencies 
B)  Third-party reports 
C)  The Federal Credit Reporting Agency 
D)  Credit bureaus

Question 2

Match the term with its definition.
-An approach based on setting a high price to convey an image of high quality or uniqueness

Accepted Answer

A) average pricing 
B) follow-the-leader pricing strategy 
C) freemium strategy 
D) markup pricing 
E) penetration pricing strategy
F)prestige pricing
G)price lining strategy
H)price skimming strategy
I)product line pricing
J)variable pricing strategy 
A) average pricing 
B) follow-the-leader pricing strategy 
C) freemium strategy 
D) markup pricing 
E) penetration pricing strategy
F)prestige pricing
G)price lining strategy
H)price skimming strategy
I)product line pricing
J)variable pricing strategy

Question 3

Match the term with its definition.
-Financing granted by retailers to individuals who purchase for personal or family use

Accepted Answer

A) consumer credit 
B) credit 
C) credit bureaus 
D) credit card 
E) installment account
F)open charge account
G)revolving charge account
H)trade credit
I)trade-credit agencies
J)value 
A) consumer credit 
B) credit 
C) credit bureaus 
D) credit card 
E) installment account
F)open charge account
G)revolving charge account
H)trade credit
I)trade-credit agencies
J)value

Question 4

For a price lining strategy, a company's inventory levels for each line will depend directly on the _____ of the customers.

Accepted Answer

A)  buying desires and income level 
B)  personal demographics 
C)  creditworthiness 
D)  product awareness 
A)  buying desires and income level 
B)  personal demographics 
C)  creditworthiness 
D)  product awareness

Question 5

If the owner of Clarisa's Fine Jewelry instructed the sales team to stress the uniqueness of the store's hand-designed jewelry, a _____ pricing strategy would be expected.

Accepted Answer

A)  skimming 
B)  prestige 
C)  follow-the-leader 
D)  dynamic 
A)  skimming 
B)  prestige 
C)  follow-the-leader 
D)  dynamic

Question 6

A business that has a gaming console intended to compete directly with Sony's PlayStation gaming console would likely use a _____ pricing strategy.

Accepted Answer

A)  follow-the-leader 
B)  penetration 
C)  prestige 
D)  variable 
A)  follow-the-leader 
B)  penetration 
C)  prestige 
D)  variable

Question 7

Walmart grants credit to consumers who purchase for personal or family use. This type of credit is called

Accepted Answer

A)  trade credit. 
B)  personal credit. 
C)  open credit. 
D)  consumer credit. 
A)  trade credit. 
B)  personal credit. 
C)  open credit. 
D)  consumer credit.

Question 8

Match the term with its definition.
-A line of credit on which the customer may charge purchases at any time, up to a pre-established limit, and must pay a percentage of the balance monthly

Accepted Answer

A) consumer credit 
B) credit 
C) credit bureaus 
D) credit card 
E) installment account
F)open charge account
G)revolving charge account
H)trade credit
I)trade-credit agencies
J)value 
A) consumer credit 
B) credit 
C) credit bureaus 
D) credit card 
E) installment account
F)open charge account
G)revolving charge account
H)trade credit
I)trade-credit agencies
J)value

Question 9

Local, state, and federal laws must be considered in setting prices.

Accepted Answer

A) True 
 B)False

Question 10

The measure of what a seller requires for giving up ownership or use of a product or service is

Accepted Answer

A)  credit. 
B)  average pricing. 
C)  demand. 
D)  price. 
A)  credit. 
B)  average pricing. 
C)  demand. 
D)  price.

Question 11

The Sherman Antitrust Act generally prohibits price fixing.

Accepted Answer

A) True 
 B)False

Question 12

Lorrie Veasey, owner of All That Swag, used discount coupons for special event items to drive customers to her retail stores. Using such promotions and stating that "the regular price is never chiseled in stone" would indicate Lorrie is using a

Accepted Answer

A)  variable pricing strategy. 
B)  price lining strategy. 
C)  price skimming strategy. 
D)  product line pricing strategy. 
A)  variable pricing strategy. 
B)  price lining strategy. 
C)  price skimming strategy. 
D)  product line pricing strategy.

Question 13

The primary purposes of the Equal Credit Opportunity Act are to inform consumers about terms of a credit agreement and to require creditors to specify how finance charges are computed.

Accepted Answer

A) True 
 B)False

Question 14

Match the term with its definition.
-An approach based on applying a percentage to a product's cost to obtain its selling price

Accepted Answer

A) average pricing 
B) follow-the-leader pricing strategy 
C) freemium strategy 
D) markup pricing 
E) penetration pricing strategy
F)prestige pricing
G)price lining strategy
H)price skimming strategy
I)product line pricing
J)variable pricing strategy 
A) average pricing 
B) follow-the-leader pricing strategy 
C) freemium strategy 
D) markup pricing 
E) penetration pricing strategy
F)prestige pricing
G)price lining strategy
H)price skimming strategy
I)product line pricing
J)variable pricing strategy

Question 15

Demand for a product typically _____ as price _____.

Accepted Answer

A)  decreases; increases 
B)  decreases; stays the same 
C)  stays the same; increases 
D)  increases; decreases 
A)  decreases; increases 
B)  decreases; stays the same 
C)  stays the same; increases 
D)  increases; decreases

Question 16

Pricing is not an exact science.

Accepted Answer

A) True 
 B)False

Question 17

Beverly is systematically comparing various cost and revenue estimates in order to determine the acceptability of alternative prices. Beverly is using

Accepted Answer

A)  break-even analysis. 
B)  price lining. 
C)  cost functioning. 
D)  demand functioning. 
A)  break-even analysis. 
B)  price lining. 
C)  cost functioning. 
D)  demand functioning.

Question 18

Fees that credit card companies charge small businesses can cut into their profits significantly.

Accepted Answer

A) True 
 B)False

Question 19

Markup rates should be high enough to cover variable costs, any price reductions, and the desired profit.

Accepted Answer

A) True 
 B)False

Question 20

Diamonds and other jewels often carry a high price to convey an image of high quality or uniqueness. This type of pricing is known as

Accepted Answer

A)  price skimming. 
B)  penetration pricing. 
C)  variable pricing. 
D)  prestige pricing. 
A)  price skimming. 
B)  penetration pricing. 
C)  variable pricing. 
D)  prestige pricing.

Exam 16: Pricing and Credit Decisions

Which of the following types of organization is a good source of consumer credit information?

Match the term with its definition. -An approach based on setting a high price to convey an image of high quality or uniqueness

Match the term with its definition. -Financing granted by retailers to individuals who purchase for personal or family use

For a price lining strategy, a company's inventory levels for each line will depend directly on the _____ of the customers.

If the owner of Clarisa's Fine Jewelry instructed the sales team to stress the uniqueness of the store's hand-designed jewelry, a _____ pricing strategy would be expected.

A business that has a gaming console intended to compete directly with Sony's PlayStation gaming console would likely use a _____ pricing strategy.

Walmart grants credit to consumers who purchase for personal or family use. This type of credit is called

Match the term with its definition. -A line of credit on which the customer may charge purchases at any time, up to a pre-established limit, and must pay a percentage of the balance monthly

Local, state, and federal laws must be considered in setting prices.

The measure of what a seller requires for giving up ownership or use of a product or service is

The Sherman Antitrust Act generally prohibits price fixing.

Lorrie Veasey, owner of All That Swag, used discount coupons for special event items to drive customers to her retail stores. Using such promotions and stating that "the regular price is never chiseled in stone" would indicate Lorrie is using a

The primary purposes of the Equal Credit Opportunity Act are to inform consumers about terms of a credit agreement and to require creditors to specify how finance charges are computed.

Match the term with its definition. -An approach based on applying a percentage to a product's cost to obtain its selling price

Demand for a product typically _____ as price _____.

Pricing is not an exact science.

Beverly is systematically comparing various cost and revenue estimates in order to determine the acceptability of alternative prices. Beverly is using

Fees that credit card companies charge small businesses can cut into their profits significantly.

Markup rates should be high enough to cover variable costs, any price reductions, and the desired profit.

Diamonds and other jewels often carry a high price to convey an image of high quality or uniqueness. This type of pricing is known as

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Demand for a product typically _ as price _.