Question 1

Freight-absorption pricing is especially useful to a firm that:

Accepted Answer

A)  has low variable costs per unit. 
B)  has low fixed costs. 
C)  has fluctuating seasonal demand. 
D)  sells items with low market value. 
E)  uses a product penetration strategy. 
A)  has low variable costs per unit. 
B)  has low fixed costs. 
C)  has fluctuating seasonal demand. 
D)  sells items with low market value. 
E)  uses a product penetration strategy.

Question 2

Critics of resale price maintenance claim that control over prices leads to inflated prices and excessive profits.

Accepted Answer

A) True 
 B)False

Question 3

In the long-run, who will most likely benefit the most from a price war?

Accepted Answer

A)  the federal government 
B)  the consumer 
C)  the largest of the competing firms 
D)  organizations that support the sales activities of the firms competing, such as trucking companies and wholesalers 
E)  all of the competing firms 
A)  the federal government 
B)  the consumer 
C)  the largest of the competing firms 
D)  organizations that support the sales activities of the firms competing, such as trucking companies and wholesalers 
E)  all of the competing firms

Question 4

When a seller offers a cash discount with terms of 5/10, n/30, this means payment is due in 5 days, or else there is a 30 percent late-payment penalty.

Accepted Answer

A) True 
 B)False

Question 5

For which of the following products are retailers most likely to use a flexible-price strategy?

Accepted Answer

A)  boats and trailers 
B)  computer printers 
C)  small appliances 
D)  deodorant soaps 
E)  videotapes 
A)  boats and trailers 
B)  computer printers 
C)  small appliances 
D)  deodorant soaps 
E)  videotapes

Question 6

Individual bottles of Stroh Ranch Marinade sell for $4. If you buy by the case, it's only $3.50 per bottle. This is an example of:

Accepted Answer

A)  price discrimination. 
B)  a quantity discount. 
C)  a trade discount. 
D)  a promotional discount. 
E)  price lining. 
A)  price discrimination. 
B)  a quantity discount. 
C)  a trade discount. 
D)  a promotional discount. 
E)  price lining.

Question 7

The owner of Knighton Hardware store received an invoice for $145 from Coleman for a case of lanterns he purchased. The terms on the invoice read, "4/10, n/20." The next day the hardware storeowner sent Coleman a payment of $139.20. The $5.80 he subtracted from his bill is an example of a _____
 discount.

Accepted Answer

A)  seasonal 
B)  cash 
C)  cumulative quantity 
D)  noncumulative quantity 
E)  trade 
A)  seasonal 
B)  cash 
C)  cumulative quantity 
D)  noncumulative quantity 
E)  trade

Question 8

The FOB in the term FOB factory pricing is an acronym for:

Accepted Answer

A)  freight on budget. 
B)  free on board. 
C)  freight off books. 
D)  fixed on budget. 
E)  free of budget. 
A)  freight on budget. 
B)  free on board. 
C)  freight off books. 
D)  fixed on budget. 
E)  free of budget.

Question 9

In order to encourage customers to make frequent purchases of its sandwiches, The House of Subs would most likely offer a:

Accepted Answer

A)  cash discount. 
B)  cumulative quantity discount. 
C)  promotional allowance. 
D)  noncumulative quantity discount. 
E)  trade discount. 
A)  cash discount. 
B)  cumulative quantity discount. 
C)  promotional allowance. 
D)  noncumulative quantity discount. 
E)  trade discount.

Question 10

A _____ is a discount on a product that a customer obtains by submitting a form or certificate provided by the seller.

Accepted Answer

A)  countertrade 
B)  functional discount 
C)  value price 
D)  rebate 
E)  cash discount 
A)  countertrade 
B)  functional discount 
C)  value price 
D)  rebate 
E)  cash discount

Question 11

Discounts and allowances are deductions from a seller's list prices.

Accepted Answer

A) True 
 B)False

Question 12

A manufacturer that realizes it has set the introductory price of its new line of snack foods too high and subsequently lowers its price is changing roactively.

Accepted Answer

A) True 
 B)False

Question 13

Due to a number of layoffs in the technology industry, there are many technology experts who are unemployed. Some saw an opportunity to become a third-party suppliers of tech support, especially after they became aware that even handling a small problem for a major company can cost $20. One of the new services is called GeekHelp. When the service was introduced to the market, the entrepreneur who started the company announced it has the cheapest per-minute rate of any of the tech support companies. Another one called Ask Dr. Tech charges a fee of $299 per year to provide tech support for a small business. Because some consumers cannot explain what is wrong with their computers beyond the fact it will not work, GeekXpress will make house calls to organization members who pay a fee of $35 per month. When it added house calls to its services, it did not raise its prices.
-Ask Dr. Tech also works with ultimate consumers. An annual fee of $89 is charged if there is only one computer in the house. An annual fee of $279 is charged if the house has four operational computers. Ask Dr. Tech offers _____ when it deals with the consumer market.

Accepted Answer

A)  functional discounts 
B)  quantity discounts 
C)  seasonal discounts 
D)  promotional allowances 
E)  trade discounts 
A)  functional discounts 
B)  quantity discounts 
C)  seasonal discounts 
D)  promotional allowances 
E)  trade discounts

Question 14

Producers typically offer trade discounts when selling to:

Accepted Answer

A)  retailers or wholesalers. 
B)  ultimate consumers. 
C)  agricultural buyers. 
D)  large quantity buyers. 
E)  manufacturers. 
A)  retailers or wholesalers. 
B)  ultimate consumers. 
C)  agricultural buyers. 
D)  large quantity buyers. 
E)  manufacturers.

Question 15

The Wine Cabinet, a store that features fine wines from all over the world, consistently prices The Complete Wine Course at $10.99. It sells this book at a price far below its regular retail price of $25.95 in order to attract wine shoppers to its store and increase its wine sales. This would be an example of:

Accepted Answer

A)  a single-price strategy. 
B)  leader pricing. 
C)  cost-plus pricing. 
D)  price lining. 
E)  penetration pricing. 
A)  a single-price strategy. 
B)  leader pricing. 
C)  cost-plus pricing. 
D)  price lining. 
E)  penetration pricing.

Question 16

The price of a haircut is $16 in all of the hair salons in the town of Fairview. All of the salons have equally good stylists, so you know that you will receive a good haircut. But, if you have your hair cut at Foxglove Salon, you will also get a ten-minute shoulder massage with your haircut. The price there is still only $16. Foxglove Salon is using _____ pricing.

Accepted Answer

A)  fair-trade 
B)  value 
C)  psychological 
D)  penetration 
E)  cost-plus 
A)  fair-trade 
B)  value 
C)  psychological 
D)  penetration 
E)  cost-plus

Question 17

Wendy's fast-food restaurant chain has priced several of its more popular menu items at $.99. This pricing strategy is an example of _____ pricing because the chain is trying to improve the ratio of its products' benefits to its price and related costs.

Accepted Answer

A)  fair-trade 
B)  value 
C)  psychological 
D)  penetration 
E)  cost-plus 
A)  fair-trade 
B)  value 
C)  psychological 
D)  penetration 
E)  cost-plus

Question 18

Under FOB factory pricing, a manufacturer of salt-water aquariums would pay all shipping costs to all of its customers--whether they lived in California or Maine.

Accepted Answer

A) True 
 B)False

Question 19

_____ are reductions from the list price offered to buyers in payment for marketing functions they will perform.

Accepted Answer

A)  Markdowns 
B)  Cash discounts 
C)  Trade discounts 
D)  Oligopolistic discounts 
E)  Quantity discounts 
A)  Markdowns 
B)  Cash discounts 
C)  Trade discounts 
D)  Oligopolistic discounts 
E)  Quantity discounts

Question 20

For the consumer, the main benefit of price lining is that it:

Accepted Answer

A)  provides the customer with the lowest possible costs. 
B)  allows price comparisons when purchasing services. 
C)  allows consumers to negotiate their own prices. 
D)  rewards repeat purchases. 
E)  simplifies buying decisions. 
A)  provides the customer with the lowest possible costs. 
B)  allows price comparisons when purchasing services. 
C)  allows consumers to negotiate their own prices. 
D)  rewards repeat purchases. 
E)  simplifies buying decisions.

Freight-absorption pricing is especially useful to a firm that:

Critics of resale price maintenance claim that control over prices leads to inflated prices and excessive profits.

In the long-run, who will most likely benefit the most from a price war?

When a seller offers a cash discount with terms of 5/10, n/30, this means payment is due in 5 days, or else there is a 30 percent late-payment penalty.

For which of the following products are retailers most likely to use a flexible-price strategy?

Individual bottles of Stroh Ranch Marinade sell for $4. If you buy by the case, it's only $3.50 per bottle. This is an example of:

The FOB in the term FOB factory pricing is an acronym for:

In order to encourage customers to make frequent purchases of its sandwiches, The House of Subs would most likely offer a:

A _____ is a discount on a product that a customer obtains by submitting a form or certificate provided by the seller.

Discounts and allowances are deductions from a seller's list prices.

A manufacturer that realizes it has set the introductory price of its new line of snack foods too high and subsequently lowers its price is changing roactively.

Producers typically offer trade discounts when selling to:

Wendy's fast-food restaurant chain has priced several of its more popular menu items at $.99. This pricing strategy is an example of _____ pricing because the chain is trying to improve the ratio of its products' benefits to its price and related costs.

Under FOB factory pricing, a manufacturer of salt-water aquariums would pay all shipping costs to all of its customers--whether they lived in California or Maine.

_____ are reductions from the list price offered to buyers in payment for marketing functions they will perform.

For the consumer, the main benefit of price lining is that it:

The Field of Marketing

The Dynamic Marketing Environment

Global Markets and Marketing

Consumer Markets and Buying Behavior

Business Markets and Buying Behavior

Marketing Research and Market Information

Product Planning and Development

Product-Mix Strategies

Brands, Packaging, and Other Product Features

Services Marketing

Price Determination

Channels of Distribution

Retailing

Wholesaling and Physical Distribution

Integrated Marketing Communications

Personal Selling and Sales Management

Advertising, Sales Promotion, and Public Relations

Strategic Marketing Planning

Marketing Implementation and Evaluation

Marketing and the Information Economy

Market Segmentation Targeting and Positioning

Filters

Exam 13: Pricing Strategies

Freight-absorption pricing is especially useful to a firm that:

Critics of resale price maintenance claim that control over prices leads to inflated prices and excessive profits.

In the long-run, who will most likely benefit the most from a price war?

When a seller offers a cash discount with terms of 5/10, n/30, this means payment is due in 5 days, or else there is a 30 percent late-payment penalty.

For which of the following products are retailers most likely to use a flexible-price strategy?

Individual bottles of Stroh Ranch Marinade sell for $4. If you buy by the case, it's only $3.50 per bottle. This is an example of:

The FOB in the term FOB factory pricing is an acronym for:

In order to encourage customers to make frequent purchases of its sandwiches, The House of Subs would most likely offer a:

A _____ is a discount on a product that a customer obtains by submitting a form or certificate provided by the seller.

Discounts and allowances are deductions from a seller's list prices.

A manufacturer that realizes it has set the introductory price of its new line of snack foods too high and subsequently lowers its price is changing roactively.

Producers typically offer trade discounts when selling to:

Wendy's fast-food restaurant chain has priced several of its more popular menu items at $.99. This pricing strategy is an example of _____ pricing because the chain is trying to improve the ratio of its products' benefits to its price and related costs.

Under FOB factory pricing, a manufacturer of salt-water aquariums would pay all shipping costs to all of its customers--whether they lived in California or Maine.

_____ are reductions from the list price offered to buyers in payment for marketing functions they will perform.

For the consumer, the main benefit of price lining is that it:

The Field of Marketing

The Dynamic Marketing Environment

Global Markets and Marketing

Consumer Markets and Buying Behavior

Business Markets and Buying Behavior

Marketing Research and Market Information

Product Planning and Development

Product-Mix Strategies

Brands, Packaging, and Other Product Features

Services Marketing

Price Determination

Channels of Distribution

Retailing

Wholesaling and Physical Distribution

Integrated Marketing Communications

Personal Selling and Sales Management

Advertising, Sales Promotion, and Public Relations

Strategic Marketing Planning

Marketing Implementation and Evaluation

Marketing and the Information Economy

Market Segmentation Targeting and Positioning

Filters