Question 1

In psychological pricing the firm takes advantage of the fact that many consumers use price as an indication of quality.

Accepted Answer

A) True 
 B)False

Question 2

The expected value model is used to determine _____ prices where the price charged reflects the _____.

Accepted Answer

A) bid;lowest cost 
B) bid;highest profit 
C) value;lowest cost 
D) value;highest profit 
A) bid;lowest cost 
B) bid;highest profit 
C) value;lowest cost 
D) value;highest profit

Question 3

Penetration pricing will most benefit a firm when:

Accepted Answer

A) customers in a market are very price-insensitive. 
B) production costs are likely to increase with increasing volume. 
C) the firm has a monopoly in a particular market. 
D) it needs to set a low price in order to capture market share. 
A) customers in a market are very price-insensitive. 
B) production costs are likely to increase with increasing volume. 
C) the firm has a monopoly in a particular market. 
D) it needs to set a low price in order to capture market share.

Question 4

A _____ gives a customer money off on a product,while a_____ reduces the product price through a money refund offer.

Accepted Answer

A) rebate;premium 
B) coupon;rebate 
C) coupon;premium 
D) premium;coupon 
A) rebate;premium 
B) coupon;rebate 
C) coupon;premium 
D) premium;coupon

Question 5

The _____ of a product varies in magnitude directly with the production,but remains constant per unit regardless of how many units are produced.

Accepted Answer

A) fixed cost per unit 
B) variable cost 
C) total cost 
D) average cost 
A) fixed cost per unit 
B) variable cost 
C) total cost 
D) average cost

Question 6

If a company institutes a 3% price decrease and the result is a 6% increase in the quantity demanded,what is the price elasticity of demand for the product?

Accepted Answer

A) -2 
B) +2 
C) -.5 
D) +.5 
A) -2 
B) +2 
C) -.5 
D) +.5

Question 7

Rebates reduce the price of the product through a money refund offer.

Accepted Answer

A) True 
 B)False

Question 8

Which of the factors affecting customers' sensitivity to price is Duracell emphasizing when it claims in television ads that its batteries last longer than its competitors'?

Accepted Answer

A) Sunk-investment effect 
B) Unique-value effect 
C) Inventory effect 
D) Shared-cost effect 
A) Sunk-investment effect 
B) Unique-value effect 
C) Inventory effect 
D) Shared-cost effect

Question 9

Prestigious products such as expensive wines and liquors and those whose quality is difficult to objectively judge have negatively sloping demand curves.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following pricing strategies involves setting the highest possible product price?

Accepted Answer

A) Social objectives 
B) Penetration 
C) Survival 
D) Skimming 
A) Social objectives 
B) Penetration 
C) Survival 
D) Skimming

Question 11

What is the break-even volume (in units)if the fixed cost of production is $1 million,the price of the product is $50,and variable cost is $25 per unit?

Accepted Answer

A) 70,000 
B) 60,000 
C) 50,000 
D) 40,000 
A) 70,000 
B) 60,000 
C) 50,000 
D) 40,000

Question 12

Which of the following is true of freight absorption pricing?

Accepted Answer

A) The seller picks up all or part of the freight charges. 
B) A standard freight charge is assessed every customer regardless of location. 
C) The freight charge is equal to the average freight cost across all customers. 
D) The seller does not pay any of the freight charges. 
A) The seller picks up all or part of the freight charges. 
B) A standard freight charge is assessed every customer regardless of location. 
C) The freight charge is equal to the average freight cost across all customers. 
D) The seller does not pay any of the freight charges.

Question 13

Which of the following would be a part of the fixed costs of a firm?

Accepted Answer

A) Product packaging materials 
B) Labor required to produce a unit of the product 
C) Executive salaries 
D) Costs of materials 
A) Product packaging materials 
B) Labor required to produce a unit of the product 
C) Executive salaries 
D) Costs of materials

Question 14

A firm following a harvesting strategy would set product prices:

Accepted Answer

A) relatively low,only slightly above costs. 
B) at the cost price,in order to penetrate the market. 
C) relatively high,to maintain margins and maximize profits. 
D) low,to maintain a presence in the market. 
A) relatively low,only slightly above costs. 
B) at the cost price,in order to penetrate the market. 
C) relatively high,to maintain margins and maximize profits. 
D) low,to maintain a presence in the market.

Question 15

The price sensitivity of demand for a product determines the ceiling of the range of acceptable prices.

Accepted Answer

A) True 
 B)False

Question 16

Italian beverage company Flavors signs a contract to provide an Indian coffee company the latest coffee production equipment.The Indian company will pay Flavors both in cash as well as in the coffee it produces using the equipment.This is an example of a (n)_____ countertrade agreement.

Accepted Answer

A) barter 
B) buyback 
C) offset 
D) cross-elasticity 
A) barter 
B) buyback 
C) offset 
D) cross-elasticity

Question 17

The ability of a firm to be a price leader whose pricing decisions are emulated by other companies is determined solely by its market share.

Accepted Answer

A) True 
 B)False

Question 18

Suppose that General Motors Corporation prices its new automobiles in such a manner that it would achieve a 15 percent return on its investment in these automobiles.Which of the following pricing policies is the company using?

Accepted Answer

A) Odd pricing 
B) Price lining 
C) Functional pricing 
D) Target-return pricing 
A) Odd pricing 
B) Price lining 
C) Functional pricing 
D) Target-return pricing

Question 19

To be profitable selling goods or services at auction,a firm must work to hold its costs up,relative to its competitors,and must have an accurate understanding of what those costs are.

Accepted Answer

A) True 
 B)False

Question 20

A break-even analysis can calculate break-even and target return volumes at different price levels.

Accepted Answer

A) True 
 B)False

In psychological pricing the firm takes advantage of the fact that many consumers use price as an indication of quality.

The expected value model is used to determine _ prices where the price charged reflects the _.

Penetration pricing will most benefit a firm when:

A _ gives a customer money off on a product,while a_ reduces the product price through a money refund offer.

The _____ of a product varies in magnitude directly with the production,but remains constant per unit regardless of how many units are produced.

If a company institutes a 3% price decrease and the result is a 6% increase in the quantity demanded,what is the price elasticity of demand for the product?

Rebates reduce the price of the product through a money refund offer.

Which of the factors affecting customers' sensitivity to price is Duracell emphasizing when it claims in television ads that its batteries last longer than its competitors'?

Prestigious products such as expensive wines and liquors and those whose quality is difficult to objectively judge have negatively sloping demand curves.

Which of the following pricing strategies involves setting the highest possible product price?

What is the break-even volume (in units)if the fixed cost of production is $1 million,the price of the product is $50,and variable cost is $25 per unit?

Which of the following is true of freight absorption pricing?

Which of the following would be a part of the fixed costs of a firm?

A firm following a harvesting strategy would set product prices:

The price sensitivity of demand for a product determines the ceiling of the range of acceptable prices.

Italian beverage company Flavors signs a contract to provide an Indian coffee company the latest coffee production equipment.The Indian company will pay Flavors both in cash as well as in the coffee it produces using the equipment.This is an example of a (n)_____ countertrade agreement.

The ability of a firm to be a price leader whose pricing decisions are emulated by other companies is determined solely by its market share.

Suppose that General Motors Corporation prices its new automobiles in such a manner that it would achieve a 15 percent return on its investment in these automobiles.Which of the following pricing policies is the company using?

To be profitable selling goods or services at auction,a firm must work to hold its costs up,relative to its competitors,and must have an accurate understanding of what those costs are.

A break-even analysis can calculate break-even and target return volumes at different price levels.

The Marketing Management Process

The Marketing Implications of Corporate and Business Strategies

Understanding Market Opportunities

Understanding Consumer Buying Behavior

Understanding Organizational Markets and Buying Behavior

Measuring Market Opportunities: Forecasting and Market Knowledge

Targeting Attractive Market Segments

Differentiation and Brand Positioning

Business Strategies: a Foundation for Marketing Program Decisions

Product Decisions

Distribution Channel Decisions

Integrated Promotion Decisions

Marketing Strategies for a Digitally Networked World

Strategies for New and Growing Markets

Strategies for Mature and Declining Markets

Organizing and Planning for Effective Implementation

Measuring and Delivering Marketing Performance

Filters

Exam 11: Pricing Decisions

In psychological pricing the firm takes advantage of the fact that many consumers use price as an indication of quality.

The expected value model is used to determine _____ prices where the price charged reflects the _____.

Penetration pricing will most benefit a firm when:

A _____ gives a customer money off on a product,while a_____ reduces the product price through a money refund offer.

The _____ of a product varies in magnitude directly with the production,but remains constant per unit regardless of how many units are produced.

If a company institutes a 3% price decrease and the result is a 6% increase in the quantity demanded,what is the price elasticity of demand for the product?

Rebates reduce the price of the product through a money refund offer.

Which of the factors affecting customers' sensitivity to price is Duracell emphasizing when it claims in television ads that its batteries last longer than its competitors'?

Prestigious products such as expensive wines and liquors and those whose quality is difficult to objectively judge have negatively sloping demand curves.

Which of the following pricing strategies involves setting the highest possible product price?

What is the break-even volume (in units)if the fixed cost of production is $1 million,the price of the product is $50,and variable cost is $25 per unit?

Which of the following is true of freight absorption pricing?

Which of the following would be a part of the fixed costs of a firm?

A firm following a harvesting strategy would set product prices:

The price sensitivity of demand for a product determines the ceiling of the range of acceptable prices.

Italian beverage company Flavors signs a contract to provide an Indian coffee company the latest coffee production equipment.The Indian company will pay Flavors both in cash as well as in the coffee it produces using the equipment.This is an example of a (n)_____ countertrade agreement.

The ability of a firm to be a price leader whose pricing decisions are emulated by other companies is determined solely by its market share.

Suppose that General Motors Corporation prices its new automobiles in such a manner that it would achieve a 15 percent return on its investment in these automobiles.Which of the following pricing policies is the company using?

To be profitable selling goods or services at auction,a firm must work to hold its costs up,relative to its competitors,and must have an accurate understanding of what those costs are.

A break-even analysis can calculate break-even and target return volumes at different price levels.

The Marketing Management Process

The Marketing Implications of Corporate and Business Strategies

Understanding Market Opportunities

Understanding Consumer Buying Behavior

Understanding Organizational Markets and Buying Behavior

Measuring Market Opportunities: Forecasting and Market Knowledge

Targeting Attractive Market Segments

Differentiation and Brand Positioning

Business Strategies: a Foundation for Marketing Program Decisions

Product Decisions

Distribution Channel Decisions

Integrated Promotion Decisions

Marketing Strategies for a Digitally Networked World

Strategies for New and Growing Markets

Strategies for Mature and Declining Markets

Organizing and Planning for Effective Implementation

Measuring and Delivering Marketing Performance

Filters

The expected value model is used to determine _ prices where the price charged reflects the _.

A _ gives a customer money off on a product,while a_ reduces the product price through a money refund offer.