Exam 12: Price Determination

If the total fixed costs are $800 and the unit contribution to overhead is $1.25, then the break-even point is 640 units.

A bottle of Glenfiddich whisky costs $21 in Germany, but costs $35 in Denmark, $43 in Sweden, and $55 in Norway. The Scandinavian countries clamped down on liquor consumption after almost endemic abuse during the 19thcentury when the average Swede consumed 46 liters a year. The Scandinavian countries used _____ to try to reduce alcoholism.

K-Block cooking charts are poster-sized recipes designed to encourage children to cook. Before marketing the easy-to-use kid's recipes, its inventor asked parents how much they would pay for a package of four recipe cards for their children. K-Block's inventor was trying to determine the _____ for her product.

During the afternoons, many theaters charge less for a movie ticket than they do for an evening show. The theaters offer these special reduced rates in order to achieve a _____ pricing objective.

Proteus USA Inc. sells gift food basket components. It carries a full line of gourmet foods, but finds its cheese and nut selection to be its best seller. Proteus USA has been in business for 11 years. For the first time in the company's history its sales were down in all categories in 1999. The next year Proteus USA increased the price of its cheese and nut selections by 20 percent to offset any continued downturn in the market. Sales of these items almost doubled what they had been in 1999. Proteus USA experienced:

The pricing objective for Gregson Landscaping Service, is "to avoid price competition." This objective is an example of a _____ pricing goal.

Dom Lucia makes decorated lamp shades, which he has tried to sell in a variety of locations. He was initially concerned that the lamp shades should not be priced too high because he wanted to have as many people as possible have the ability to buy and enjoy one of his creative lamp shades. When he decided to increase his price by 60 percent so he could pay his own living expenses, demand for his lamp shades increased drastically. Inadvertently, Lucia learned that his lamp shades had:

Marginal analysis as a basis for price setting:

All of the garages and tire retailers that repair flat tires in one county in North Dakota charge $8--no more and no less. From this information, you know the garages and tire retailers in this North Dakota county use:

Which of the following pricing strategies can the manager of the Roast 'n Brew coffeehouse follow if she believes the store should have a sales-oriented goal?

Which of the following organizations would be most likely to adopt a price stabilization goal?

Which of the following is an example of a fixed cost for a bottler of spring water?

When Patricia Flagg's friend asked her create something to sell at a holiday boutique food booth, she had no idea she was launching a new business. For her initial product she packaged eleven different kinds of beans, some herbs, and some spices with directions to add a ham hock, water, and vegetables for Minnesota Heartland soup. She has since added Illinois Prairie Corn chowder, which has dry corn, rice, and seasonings, as well as a Louisiana Red Bean gumbo mix and a New England fish soup mix. Each mix makes enough to feed 10 people. Her annual fixed costs are $9,000, and the variable costs for one bag of soup mix are $1.50. An individual bag of soup mix sells for $6.50. In her first year of operation, she sold 3,800 mixes. -Flagg pricing objective for next year is "to sell 5,000 bags of soup mix." She has adopted a _____ goal.

Many firms that experience reasonably stable cost and demand structures will find break-even analysis helpful in the short run.

Marnie Czeider sells homemade banana bread at a local flea market on Saturdays for $12 a loaf. She sells 100 loaves every Saturday. Czeider earns a 75 percent profit on each loaf she sells. What method of pricing is she using?

According to economic theory, profit maximization is fundamentally wrong.

Which of the following is an example of direct competition for Aussie brand shampoo?

In which type of market structure, would the competitors most likely experience a kinked demand curve?

Which of the following organizations is most likely to use marginal cost pricing because of significant seasonal fluctuations in sales?

_____ occurs when customers infer that an item is of a better quality because it is priced higher.