Exam 11: Pricing Decisions

Cloud 9,a US-based producer of chips and snacks,sells its products to a French supermarket chain.30% of the revenues it receives from the sales must be spent on products from France.This is an example of a(n)_____ countertrade agreement.

Compare the relative price levels associated with penetration pricing and maintaining a quality or service differentiation.

Discriminatory pricing occurs when a firm sells a product or service at two or more prices,not determined by proportional differences in cost.

In freight absorption pricing,the seller does not pick up any freight charges.

The unit cost of a product is $10.$2 million is invested in capital for the production of the product,and the expected sales are 100,000 units.How much would the target return price change if the desired rate of return on the investment is raised from 15% to 20%?

Price elasticity of demand is calculated by dividing the percent change in price by the percent change in quantity demanded.

When a firm has a strong competitive position based on superior product quality or customer service,its primary pricing objective is to generate sufficient revenue to maintain that advantage.

Which of the following best describes a trade-in allowance?

The fixed cost per unit of a product:

Differentiate between target return pricing and market pricing.

Buyers of GTB automobiles perceive such cars as more luxurious and more prestigious than other automobiles and are willing to pay more for these cars.This is an example of the _____ effect.

The larger the proportion of price-sensitive customers in a product's market,the more sensitive overall demand is to a change in the product's price.

When firms use the going-rate pricing approach,they base product prices on:

Which of the following would be a part of the variable costs for a firm?

What is the unit cost of a product if the firm expects to sell 100,000 units,fixed costs being $1 million,and variable cost per unit being $20?

The penetration pricing strategy is most appropriate for a firm to pursue when:

List the steps involved in the price setting process.

Under a going-rate pricing approach,firms set prices by adding a desired markup on retail to the unit cost.

It is best to ignore situational factors such as competitors' costs and prices,availability of substitutes,and prices of substitutes while setting the price for product.

Which of the following best describes a premium?