Question 1

Which of the following statements about the legal and regulatory aspect of pricing is most accurate?

Accepted Answer

A) The Robinson-Patman Act deals with predatory pricing. 
B) The Consumer Goods Pricing Act is the only federal legislation that deals directly with pricing issues. 
C) The Sherman Act deals only with vertical price fixing. 
D) The Federal Trade Commission Act deals with predatory pricing,deceptive pricing,and geographical pricing issues. 
E) The Consumer Goods Pricing Act and the Robinson-Patman Act deal with price discrimination. 
A) The Robinson-Patman Act deals with predatory pricing. 
B) The Consumer Goods Pricing Act is the only federal legislation that deals directly with pricing issues. 
C) The Sherman Act deals only with vertical price fixing. 
D) The Federal Trade Commission Act deals with predatory pricing,deceptive pricing,and geographical pricing issues. 
E) The Consumer Goods Pricing Act and the Robinson-Patman Act deal with price discrimination.

Question 2

Within the channel of distribution for certain types of imported furniture,the typical trade terms are 40/15/10.If a dining room table has a list price of $1,000,how much would the manufacturer sell the table to a jobber for?

Accepted Answer

A) $1,000 
B) $600 
C) $510 
D) $459 
E) $400 
A) $1,000 
B) $600 
C) $510 
D) $459 
E) $400

Question 3

Figure 14-5
  
-Figure 14-5 above shows the results of a spreadsheet simulation to select a price to achieve a target return on investment (ROI).What is the ROI for Scenario A?

Accepted Answer

A) 2% 
B) 5% 
C) 10% 
D) 14% 
E) 17% 
A) 2% 
B) 5% 
C) 10% 
D) 14% 
E) 17%

Question 4

Assume that Nike Variety tennis shoes have variable costs of $6 and sell for $24.Also assume that Nike Wimbledon tennis shoes have variable costs of $38 and sell for $48,but when fixed overhead is added,the shoe is unprofitable by $2 per pair.Which statement is most accurate regarding Nike's pricing approach with these two products?

Accepted Answer

A) Demand for each shoe is unrelated to price. 
B) Nike is using a cost-plus-percentage-of-cost pricing strategy. 
C) Nike is using a product-line pricing strategy. 
D) Demand for each shoe is unrelated to product quality. 
E) Consumers do not use price as an indication of quality. 
A) Demand for each shoe is unrelated to price. 
B) Nike is using a cost-plus-percentage-of-cost pricing strategy. 
C) Nike is using a product-line pricing strategy. 
D) Demand for each shoe is unrelated to product quality. 
E) Consumers do not use price as an indication of quality.

Question 5

The fashion buyer for Neiman Marcus is in Italy to view the new collections and to order for the coming season.In Milan,she negotiates a good price for a quantity of shoes in a range of sizes and styles,FOB factory.This means that

Accepted Answer

A) the factory selects the mode of transportation,pays the freight charges,and is responsible for any damage because the seller retains title to the goods until they are delivered to Neiman Marcus. 
B) Neiman Marcus selects the mode of transportation,pays freight charges,and is responsible for any damage while the shoes are in transit because title passes to the firm at the point of loading. 
C) Neiman Marcus and the factory will split the freight costs. 
D) the factory pays the freight cost to a designated port (airport or seaport)in the United States while Neiman Marcus pays the freight from that port to its final destination within the United States. 
E) the factory passes the title when the goods are loaded but will pay all shipping costs. 
A) the factory selects the mode of transportation,pays the freight charges,and is responsible for any damage because the seller retains title to the goods until they are delivered to Neiman Marcus. 
B) Neiman Marcus selects the mode of transportation,pays freight charges,and is responsible for any damage while the shoes are in transit because title passes to the firm at the point of loading. 
C) Neiman Marcus and the factory will split the freight costs. 
D) the factory pays the freight cost to a designated port (airport or seaport)in the United States while Neiman Marcus pays the freight from that port to its final destination within the United States. 
E) the factory passes the title when the goods are loaded but will pay all shipping costs.

Question 6

When establishing product-line pricing,the price differentials between items in the line should make sense to customers and reflect differences in terms of the

Accepted Answer

A) perceived value of the products offered. 
B) actual costs of the features offered. 
C) perceived risk. 
D) quantity discounts and price allowances offered. 
E) market segments targeted. 
A) perceived value of the products offered. 
B) actual costs of the features offered. 
C) perceived risk. 
D) quantity discounts and price allowances offered. 
E) market segments targeted.

Question 7

Which of the following statements regarding quantity discounts is most accurate?

Accepted Answer

A) Noncumulative quantity discounts encourage large individual purchase orders,not a series of orders. 
B) Noncumulative quantity discounts encourage repeat buying by a single customer to a far greater degree than do cumulative quantity discounts. 
C) Quantity discounts are primarily used to undercut competitors' prices. 
D) Noncumulative quantity discounts encourage smaller long-term repeat purchases rather than less frequent larger short-term purchases. 
E) Quantity discounts can basically be used only once with each reseller or the price will increase. 
A) Noncumulative quantity discounts encourage large individual purchase orders,not a series of orders. 
B) Noncumulative quantity discounts encourage repeat buying by a single customer to a far greater degree than do cumulative quantity discounts. 
C) Quantity discounts are primarily used to undercut competitors' prices. 
D) Noncumulative quantity discounts encourage smaller long-term repeat purchases rather than less frequent larger short-term purchases. 
E) Quantity discounts can basically be used only once with each reseller or the price will increase.

Question 8

The most commonly used pricing method for business products is

Accepted Answer

A) target return on investment. 
B) customary. 
C) standard markup. 
D) target profit. 
E) cost-plus pricing. 
A) target return on investment. 
B) customary. 
C) standard markup. 
D) target profit. 
E) cost-plus pricing.

Question 9

Lady Marion Seafood,Inc. ,sells five-pound packages of Alaskan salmon.Assume that its unit variable cost per package is $30 and its fixed cost is $250,000.It wants a target profit of $38,000 based on a volume of 16,000 packages.What should the firm charge for a five-pound package of salmon?

Accepted Answer

A) $25.00 
B) $33.94 
C) $40.00 
D) $48.00 
E) $61.25 
A) $25.00 
B) $33.94 
C) $40.00 
D) $48.00 
E) $61.25

Question 10

All of the following are pricing practices that are closely scrutinized because of potential unethical or illegal actions except which?

Accepted Answer

A) price discrimination 
B) predatory pricing 
C) showrooming 
D) price fixing 
E) deceptive pricing 
A) price discrimination 
B) predatory pricing 
C) showrooming 
D) price fixing 
E) deceptive pricing

Question 11

Target return-on-sales pricing refers to

Accepted Answer

A) adjusting the price of a product so it is "in line" with that of its largest competitor. 
B) setting the price of a line of products at a number of different price points. 
C) adding a fixed percentage to the cost of all items in a specific product class. 
D) setting prices to achieve a profit that is a specified percentage of the sales volume. 
E) setting a price based on a specific annual dollar target profit volume. 
A) adjusting the price of a product so it is "in line" with that of its largest competitor. 
B) setting the price of a line of products at a number of different price points. 
C) adding a fixed percentage to the cost of all items in a specific product class. 
D) setting prices to achieve a profit that is a specified percentage of the sales volume. 
E) setting a price based on a specific annual dollar target profit volume.

Question 12

What are the two general methods for quoting prices related to transportation costs? Explain how each is used.

Accepted Answer

The two general methods for quoting pric

Question 13

Deliberately selling a product below its customary price,not to increase sales,but to attract customers' attention in hopes that they will buy other products as well,is referred to as

Accepted Answer

A) loss-leader pricing. 
B) bundle pricing. 
C) magnet pricing. 
D) predatory pricing. 
E) below-market pricing. 
A) loss-leader pricing. 
B) bundle pricing. 
C) magnet pricing. 
D) predatory pricing. 
E) below-market pricing.

Question 14

The price the seller quotes that includes all transportation costs is referred to as

Accepted Answer

A) inclusive transport pricing. 
B) geomodal pricing. 
C) uniform delivered pricing. 
D) FOB origin pricing. 
E) destination pricing. 
A) inclusive transport pricing. 
B) geomodal pricing. 
C) uniform delivered pricing. 
D) FOB origin pricing. 
E) destination pricing.

Question 15

A pricing method where a supplier is reimbursed for all costs,regardless of what they may be,and also receives an agreed-on dollar amount of profit that is independent of the final cost of the project,is referred to as

Accepted Answer

A) target return on investment pricing. 
B) cost-plus-percentage-of-cost pricing. 
C) target return on sales pricing. 
D) experience curve pricing. 
E) cost-plus-fixed-fee pricing. 
A) target return on investment pricing. 
B) cost-plus-percentage-of-cost pricing. 
C) target return on sales pricing. 
D) experience curve pricing. 
E) cost-plus-fixed-fee pricing.

Question 16

Selecting one or more geographical locations from which the list price for products plus freight expenses are charged to the buyer is referred to as

Accepted Answer

A) FOB origin pricing. 
B) basing-point pricing. 
C) single-zone pricing. 
D) multiple-zone pricing. 
E) freight absorption pricing. 
A) FOB origin pricing. 
B) basing-point pricing. 
C) single-zone pricing. 
D) multiple-zone pricing. 
E) freight absorption pricing.

Question 17

Target profit pricing refers to

Accepted Answer

A) adjusting the price of a product so it is "in line" with that of its largest competitor. 
B) setting an annual target of a specific dollar volume of profit. 
C) setting the price of a line of products at a number of different price points. 
D) adding a fixed percentage to the cost of all items in a specific product class. 
E) setting prices to achieve a profit that is a specified percentage of production costs. 
A) adjusting the price of a product so it is "in line" with that of its largest competitor. 
B) setting an annual target of a specific dollar volume of profit. 
C) setting the price of a line of products at a number of different price points. 
D) adding a fixed percentage to the cost of all items in a specific product class. 
E) setting prices to achieve a profit that is a specified percentage of production costs.

Question 18

With profit-oriented approaches to pricing,a price setter may choose to balance both ________ and ________ to set price.

Accepted Answer

A) revenue;profit 
B) tangible goods;services 
C) costs;revenue 
D) demand;supply 
E) costs;demand 
A) revenue;profit 
B) tangible goods;services 
C) costs;revenue 
D) demand;supply 
E) costs;demand

Question 19

What pricing strategy did the National Aeronautics and Space Administration (NASA)use to pay Lockheed Martin for the Orion lunar spacecraft?

Accepted Answer

A) cost-plus-percentage-of-cost pricing 
B) experience curve pricing 
C) standard markup pricing 
D) yield management pricing 
E) cost-plus-fixed-fee pricing 
A) cost-plus-percentage-of-cost pricing 
B) experience curve pricing 
C) standard markup pricing 
D) yield management pricing 
E) cost-plus-fixed-fee pricing

Question 20

All of the following statements about standard markup pricing are true except which?

Accepted Answer

A) High-volume products usually have smaller markups than do low-volume products. 
B) The percentage markup depends on the type of retail store and the product involved. 
C) Markups must cover all expenses of the store,pay for overhead costs,and contribute something to profits. 
D) A price is achieved by summing the total unit cost of providing a product or service and adding a specific amount to the cost. 
E) Supermarket managers have such a large number of products that estimating the demand for each product as a means of setting price is impossible. 
A) High-volume products usually have smaller markups than do low-volume products. 
B) The percentage markup depends on the type of retail store and the product involved. 
C) Markups must cover all expenses of the store,pay for overhead costs,and contribute something to profits. 
D) A price is achieved by summing the total unit cost of providing a product or service and adding a specific amount to the cost. 
E) Supermarket managers have such a large number of products that estimating the demand for each product as a means of setting price is impossible.

Exam 14: Arriving at the Final Price

Which of the following statements about the legal and regulatory aspect of pricing is most accurate?

Within the channel of distribution for certain types of imported furniture,the typical trade terms are 40/15/10.If a dining room table has a list price of $1,000,how much would the manufacturer sell the table to a jobber for?

Figure 14-5 -Figure 14-5 above shows the results of a spreadsheet simulation to select a price to achieve a target return on investment (ROI).What is the ROI for Scenario A?

The fashion buyer for Neiman Marcus is in Italy to view the new collections and to order for the coming season.In Milan,she negotiates a good price for a quantity of shoes in a range of sizes and styles,FOB factory.This means that

When establishing product-line pricing,the price differentials between items in the line should make sense to customers and reflect differences in terms of the

Which of the following statements regarding quantity discounts is most accurate?

The most commonly used pricing method for business products is

Lady Marion Seafood,Inc. ,sells five-pound packages of Alaskan salmon.Assume that its unit variable cost per package is $30 and its fixed cost is $250,000.It wants a target profit of $38,000 based on a volume of 16,000 packages.What should the firm charge for a five-pound package of salmon?

All of the following are pricing practices that are closely scrutinized because of potential unethical or illegal actions except which?

Target return-on-sales pricing refers to

What are the two general methods for quoting prices related to transportation costs? Explain how each is used.

Deliberately selling a product below its customary price,not to increase sales,but to attract customers' attention in hopes that they will buy other products as well,is referred to as

The price the seller quotes that includes all transportation costs is referred to as

A pricing method where a supplier is reimbursed for all costs,regardless of what they may be,and also receives an agreed-on dollar amount of profit that is independent of the final cost of the project,is referred to as

Selecting one or more geographical locations from which the list price for products plus freight expenses are charged to the buyer is referred to as

Target profit pricing refers to

With profit-oriented approaches to pricing,a price setter may choose to balance both ________ and ________ to set price.

What pricing strategy did the National Aeronautics and Space Administration (NASA)use to pay Lockheed Martin for the Orion lunar spacecraft?

All of the following statements about standard markup pricing are true except which?

Creating Customer Relationships and Value Through Marketing

Developing Successful Organizational and Marketing Strategies

Scanning the Marketing Environment

Ethical and Social Responsibility for Sustainable Marketing

Understanding Consumer Behavior

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Understanding and Reaching Global Consumers and Markets

Marketing Research: From Customer Insights to Actions

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With profit-oriented approaches to pricing,a price setter may choose to balance both and to set price.