Exam 11: Pricing Decisions

Penetration pricing is appropriate when,in addition to a large market,the firm's costs are low compared to competitors' and the SBU is pursuing a low-cost strategy.

Penetration pricing is the most appropriate strategy when consumers are not price-sensitive.

Laboratory or test-market experiments provide insights into the price-demand relationship for a product and also reflect the likely reactions of competitors to different prices or changes in price over time.

A hotel in Hawaii charges its hotel guests premium prices for food at its in-house restaurant.As the guests are unaware of lower-priced restaurants in the area,they are often seen to be less price-sensitive than the locals.Which of the factors that affect customers' sensitivity to pricebest explains the lower price-sensitivity of outsiders?

Which of the following best describes the unique-value effect on price sensitivity?

The value-in-use assessment process begins with the selection of a reference product,usually the product the customer is currently using or a major competitor's product.

Aries,a small-appliance manufacturer,produces a line of mixer-grinders and expects to sell 60,000 units in the coming period.A fixed cost of $600,000 is associated with producing the mixer-grinders,and variable cost is $20 per unit.The unit cost for each mixer-grinder would be _____.

The difference between the value perceived by the customer and the manufacturer's marginal cost defines the range of possible prices.

A product's average cost per unit and the price necessary to cover that cost varies with the quantity produced.

The price elasticity of demand is the:

When firms pioneer the development of a new product-market,they may set the price very high and appeal to only the least price-sensitive segment of potential customers in order to maximize short-term profits.This is a _____.

What would the price elasticity of demand for a product be if the seller raises the price by 3% and demand falls by 12%? Would this indicate price elasticity or inelasticity?

The typical procedure for determining price under the markup approach is to first calculate the cost per unit by adding variable cost to fixed costs divided by the change in price.

A museum offers lower ticket prices for children from schools in the economically disadvantaged areas of the city.This is an example of _____ pricing.

In the uniform delivered pricing method:

Many firms base their pricing decisions largely on what is necessary to recover their costs or match competitors.Discuss.

In what market conditions can a firm most appropriately adopt quality or service differentiation as a pricing object?

Which of the following is the formula for determining price elasticity of demand?

A firm observes that a particular product-market in which it is involved is in its late majority stage.So it adopts the differentiated defender strategy;and sets price to maintain margins and maximize profit or return on investment even though some customers may switch to competitive brands or substitutes.In view of this data we can say that the firm has adopted the _____ pricing objective.

When is differential pricing most likely to occur?