Question 1

Under transportation regulation, the amount found in a Tariff as payment to a carrier for performing a given transport service is called a:

Accepted Answer

A)  price 
B)  rate 
C)  demand charge 
D)  supply charge 
A)  price 
B)  rate 
C)  demand charge 
D)  supply charge B

Question 2

Define and discuss Cost of Service Pricing.

Accepted Answer

Cost of service pricing takes a marginal-cost approach to pricing. Cost of service pricing can also be analyzed as a total cost or fully allocated cost approach to price setting, where the price charged by a carrier for a movement of a commodity represents the recovery of the related costs to make the movement. Here: 
Price = FC + VC + Profit. 
Price is determined by the allocation of fixed costs and variable costs to the commodity movement and adding a margin for profit. Relating pricing to total costs or fully allocated costs does not take into account such considerations as competition and elasticity of demand affecting the price charged. The presence of common costs raises some problems for cost-of-service pricing, particularly the average cost approach. If rates are based upon average of fully allocated costs, it becomes necessary to apportion these costs by some arbitrary means.

Question 3

Value of service pricing is best defined as:

Accepted Answer

A)  pricing based upon common costs 
B)  Pricing based upon what the traffic will bear 
C)  pricing based on marginal costs 
D)  pricing based on average costs 
A)  pricing based upon common costs 
B)  Pricing based upon what the traffic will bear 
C)  pricing based on marginal costs 
D)  pricing based on average costs B

Question 4

Define third degree price discrimination and explain the two necessary conditions before it can be practiced? Does this practice fit any one mode more than any other?

Accepted Answer

Third-degree price discrimination is whe

Question 5

There are two separate concepts in Cost of Service pricing. They are:

Accepted Answer

A)  head haul, back haul and extent of competition 
B)  commodity and density 
C)  prices based on average or marginal cost 
D)  competition and direction of travel 
A)  head haul, back haul and extent of competition 
B)  commodity and density 
C)  prices based on average or marginal cost 
D)  competition and direction of travel

Question 6

The theory of contestable markets is offered to identify the relevant market structure for the deregulated transportation environment. Explain the theory.

Accepted Answer

Explanation is offered for the case of a

Question 7

An oligopoly can be defined as:

Accepted Answer

Competition between a few large sellers

Question 8

A pricing objective that aims to increase cash flow through the use of low prices is referred to as:

Accepted Answer

A)  Profit maximization 
B)  Skimming pricing 
C)  Penetration pricing 
D)  Survival-based pricing 
A)  Profit maximization 
B)  Skimming pricing 
C)  Penetration pricing 
D)  Survival-based pricing

Question 9

Three necessary conditions must be met before a seller can practice third-degree price discrimination. The conditions are: buyers must be separated into groups or submarkets according to their elasticities of demand, the seller must possess some degree of monopoly power, and

Accepted Answer

A)  the seller must prevent transfer of sales between the groups or submarkets. 
B)  the seller must have "market dominance". 
C)  the buyer must have profit maximization as a goal. 
D)  the buyer must have variable costs that have to be recovered. 
A)  the seller must prevent transfer of sales between the groups or submarkets. 
B)  the seller must have "market dominance". 
C)  the buyer must have profit maximization as a goal. 
D)  the buyer must have variable costs that have to be recovered.

Question 10

Define and discuss variable or marginal cost.

Accepted Answer

The variable or marginal cost, of provid

Question 11

Distinguish between the terms "rate" and "price" as they relate to transportation?

Accepted Answer

A rate, appropriate to the regulation of

Question 12

What are some of the problems which the use of Common Costs raises for Cost of Service Pricing, particularly the Average Cost approach?

Accepted Answer

A)  Rates based upon average or fully allocated cost makes it necessary to apportion common costs by some arbitrary means. 
B)  Motor carriers are structured such as to make allocation extremely difficult. 
C)  Rail carriers have difficulty defining their common costs as they have wide spread geographic operations 
D)  All transport firms have significant difficulty with cost concepts due the very nature of their operations 
A)  Rates based upon average or fully allocated cost makes it necessary to apportion common costs by some arbitrary means. 
B)  Motor carriers are structured such as to make allocation extremely difficult. 
C)  Rail carriers have difficulty defining their common costs as they have wide spread geographic operations 
D)  All transport firms have significant difficulty with cost concepts due the very nature of their operations

Question 13

As shown in Figure 4.1  in text book...which of the following is not a simplifying assumption?

Accepted Answer

A)  Firm's products or services are homogeneous 
B)  only one group of customers 
C)  there are costs which are not the responsibility of the customer 
D)  the firm possess some monopolistic power 
A)  Firm's products or services are homogeneous 
B)  only one group of customers 
C)  there are costs which are not the responsibility of the customer 
D)  the firm possess some monopolistic power

Question 14

The basic types of rates are class, exception and:

Accepted Answer

A)  Mileage 
B)  Commodity 
C)  Standard 
D)  Discount 
A)  Mileage 
B)  Commodity 
C)  Standard 
D)  Discount

Question 15

Value of service pricing is based on the concept which states:

Accepted Answer

A)  shippers should pay rates high enough to insure a high profit for the carrier. 
B)  carriers should set prices based on the level of service they offer 
C)  rates should be related to value of the commodity - the higher the value of the commodity the higher the rate should be 
D)  shippers should offer a price that they feel is fair in relation to the service offered. 
A)  shippers should pay rates high enough to insure a high profit for the carrier. 
B)  carriers should set prices based on the level of service they offer 
C)  rates should be related to value of the commodity - the higher the value of the commodity the higher the rate should be 
D)  shippers should offer a price that they feel is fair in relation to the service offered.

Question 16

What is the current status of rates under deregulation?

Accepted Answer

The diminished role of the rate bureau i

Question 17

Carrier pricing decisions fall into three categories. The categories are setting prices for a new service, modifying prices over time, and:

Accepted Answer

A)  responding to price changes. 
B)  reacting to government policies. 
C)  anticipating future market conditions. 
D)  changing prices in response to government instruction. 
A)  responding to price changes. 
B)  reacting to government policies. 
C)  anticipating future market conditions. 
D)  changing prices in response to government instruction.

Question 18

The relevant market structure under deregulation is described by a theory which  substitutes potential competition for the active participation of many sellers. What is this theory called?

Accepted Answer

A)  the law of supply and demand 
B)  marginal utility 
C)  monopolistic competition 
D)  contestable markets 
A)  the law of supply and demand 
B)  marginal utility 
C)  monopolistic competition 
D)  contestable markets

Question 19

What is the definition of value of service pricing?

Accepted Answer

Value of service pri

Question 20

Which is correct regarding value-of-service pricing?

Accepted Answer

A)  the model is used to determine the lower limit of freight rates 
B)  the model considers the supply side of the transportation pricing function 
C)  the value of the product is considered to be irrelevant in the determination of the freight rate 
D)  the model considers the ability of the commodity to bear a charge 
A)  the model is used to determine the lower limit of freight rates 
B)  the model considers the supply side of the transportation pricing function 
C)  the value of the product is considered to be irrelevant in the determination of the freight rate 
D)  the model considers the ability of the commodity to bear a charge

Under transportation regulation, the amount found in a Tariff as payment to a carrier for performing a given transport service is called a:

Define and discuss Cost of Service Pricing.

Value of service pricing is best defined as:

Define third degree price discrimination and explain the two necessary conditions before it can be practiced? Does this practice fit any one mode more than any other?

There are two separate concepts in Cost of Service pricing. They are:

The theory of contestable markets is offered to identify the relevant market structure for the deregulated transportation environment. Explain the theory.

An oligopoly can be defined as:

A pricing objective that aims to increase cash flow through the use of low prices is referred to as:

Three necessary conditions must be met before a seller can practice third-degree price discrimination. The conditions are: buyers must be separated into groups or submarkets according to their elasticities of demand, the seller must possess some degree of monopoly power, and

Define and discuss variable or marginal cost.

Distinguish between the terms "rate" and "price" as they relate to transportation?

What are some of the problems which the use of Common Costs raises for Cost of Service Pricing, particularly the Average Cost approach?

As shown in Figure 4.1 in text book...which of the following is not a simplifying assumption?

The basic types of rates are class, exception and:

Value of service pricing is based on the concept which states:

What is the current status of rates under deregulation?

Carrier pricing decisions fall into three categories. The categories are setting prices for a new service, modifying prices over time, and:

The relevant market structure under deregulation is described by a theory which substitutes potential competition for the active participation of many sellers. What is this theory called?

What is the definition of value of service pricing?

Which is correct regarding value-of-service pricing?

Global Supply Chains the Role and Importance of Transportation

Transportation and the Economy

Transportation Technology and Systems

Motor Carriers

Railroads

Airlines

Water Carriers and Pipelines

Third Party Logistics

Transportation Risk Management

Global Transportation Management

Governmental Roles in Transportation

Issues and Challenges for Global Supply Chains

Filters

Exam 4: Costing and Pricing for Transportation

Under transportation regulation, the amount found in a Tariff as payment to a carrier for performing a given transport service is called a:

Define and discuss Cost of Service Pricing.

Value of service pricing is best defined as:

Define third degree price discrimination and explain the two necessary conditions before it can be practiced? Does this practice fit any one mode more than any other?

There are two separate concepts in Cost of Service pricing. They are:

The theory of contestable markets is offered to identify the relevant market structure for the deregulated transportation environment. Explain the theory.

An oligopoly can be defined as:

A pricing objective that aims to increase cash flow through the use of low prices is referred to as:

Three necessary conditions must be met before a seller can practice third-degree price discrimination. The conditions are: buyers must be separated into groups or submarkets according to their elasticities of demand, the seller must possess some degree of monopoly power, and

Define and discuss variable or marginal cost.

Distinguish between the terms "rate" and "price" as they relate to transportation?

What are some of the problems which the use of Common Costs raises for Cost of Service Pricing, particularly the Average Cost approach?

As shown in Figure 4.1 in text book...which of the following is not a simplifying assumption?

The basic types of rates are class, exception and:

Value of service pricing is based on the concept which states:

What is the current status of rates under deregulation?

Carrier pricing decisions fall into three categories. The categories are setting prices for a new service, modifying prices over time, and:

The relevant market structure under deregulation is described by a theory which substitutes potential competition for the active participation of many sellers. What is this theory called?

What is the definition of value of service pricing?

Which is correct regarding value-of-service pricing?

Global Supply Chains the Role and Importance of Transportation

Transportation and the Economy

Transportation Technology and Systems

Motor Carriers

Railroads

Airlines

Water Carriers and Pipelines

Third Party Logistics

Transportation Risk Management

Global Transportation Management

Governmental Roles in Transportation

Issues and Challenges for Global Supply Chains

Filters