Question 1

Price discrimination refers to

Accepted Answer

A) the practice of charging different prices to different buyers for goods of like grade and quality. 
B) an arrangement a manufacturer makes with a reseller to handle only its products and not those of a competitor. 
C) the practice of charging a very low price for a product with the intent of driving competitors out of business. 
D) a conspiracy among firms to set prices for a product or service. 
E) a seller's requirement that the purchaser of one product also buy another product in the line. 
A) the practice of charging different prices to different buyers for goods of like grade and quality. 
B) an arrangement a manufacturer makes with a reseller to handle only its products and not those of a competitor. 
C) the practice of charging a very low price for a product with the intent of driving competitors out of business. 
D) a conspiracy among firms to set prices for a product or service. 
E) a seller's requirement that the purchaser of one product also buy another product in the line.

Question 2

The practice of charging a very low price for a product with the intent of driving competitors out of business is referred to as

Accepted Answer

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

Question 3

Another name for a fixed-price policy is

Accepted Answer

A) customary pricing. 
B) one-price policy. 
C) dynamic pricing. 
D) standard markup pricing. 
E) uniform pricing. 
A) customary pricing. 
B) one-price policy. 
C) dynamic pricing. 
D) standard markup pricing. 
E) uniform pricing.

Question 4

The retail price of fax machines has decreased from over $10,000 in the early 1970s to less than $100 today. This is due in large part to

Accepted Answer

A) skimming pricing. 
B) prestige pricing. 
C) odd-even pricing. 
D) experience curve pricing. 
E) customary pricing. 
A) skimming pricing. 
B) prestige pricing. 
C) odd-even pricing. 
D) experience curve pricing. 
E) customary pricing.

Question 5

Which of the following is a cost-oriented approach to pricing?

Accepted Answer

A) skimming pricing 
B) prestige pricing 
C) loss-leader pricing 
D) experience curve pricing 
E) bundle pricing 
A) skimming pricing 
B) prestige pricing 
C) loss-leader pricing 
D) experience curve pricing 
E) bundle pricing

Question 6

The pricing strategy that is almost the exact opposite of skimming pricing is

Accepted Answer

A) target pricing. 
B) penetration pricing. 
C) price lining. 
D) odd-even pricing. 
E) prestige pricing. 
A) target pricing. 
B) penetration pricing. 
C) price lining. 
D) odd-even pricing. 
E) prestige pricing.

Question 7

It is relatively easy to measure the incremental cost of a new advertising campaign; what is not as easy is

Accepted Answer

A) measuring the extra fixed cost involved. 
B) measuring the extra variable cost involved. 
C) measuring the incremental revenue generated by the new advertising campaign. 
D) determining whether customers who stop buying the product are reacting negatively to the advertisement or to some other aspect of the product itself. 
E) determining what percentage of the ad-generated revenue should be reinvested into additional advertisements of the same form. 
A) measuring the extra fixed cost involved. 
B) measuring the extra variable cost involved. 
C) measuring the incremental revenue generated by the new advertising campaign. 
D) determining whether customers who stop buying the product are reacting negatively to the advertisement or to some other aspect of the product itself. 
E) determining what percentage of the ad-generated revenue should be reinvested into additional advertisements of the same form.

Question 8

To encourage buyers to stock inventory earlier than their normal demand would require, manufacturers often use

Accepted Answer

A) noncumulative discounts. 
B) cumulative discounts. 
C) seasonal discounts. 
D) trade discounts. 
E) functional discounts. 
A) noncumulative discounts. 
B) cumulative discounts. 
C) seasonal discounts. 
D) trade discounts. 
E) functional discounts.

Question 9

Identifying pricing objectives and constraints occurs during __________ of the price-setting process.

Accepted Answer

A) Step 1 
B) Step 2 
C) Step 3 
D) Step 4 
E) Step 5 
A) Step 1 
B) Step 2 
C) Step 3 
D) Step 4 
E) Step 5

Question 10

All of the following statements regarding the legal and regulatory aspects of pricing are true except

Accepted Answer

A) there has been a movement toward a "rule of reason" in both horizontal and vertical price fixing cases. 
B) the Robinson-Patman Act allows for price differentials to different customers under the "cost justification defense." 
C) a manufacturer's MSRP has been declared illegal per se by a recent U.S. Supreme Court decision. 
D) the "rule of reason" perspective is the direct opposite of the per se rule. 
E) wholesalers can fix the maximum retail price for their products provided the price agreement does not create an "unreasonable restraint of trade." 
A) there has been a movement toward a "rule of reason" in both horizontal and vertical price fixing cases. 
B) the Robinson-Patman Act allows for price differentials to different customers under the "cost justification defense." 
C) a manufacturer's MSRP has been declared illegal per se by a recent U.S. Supreme Court decision. 
D) the "rule of reason" perspective is the direct opposite of the per se rule. 
E) wholesalers can fix the maximum retail price for their products provided the price agreement does not create an "unreasonable restraint of trade."

Question 11

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 12

Tendollars.com offers thousands of gifts, all priced at $10. This is an example of

Accepted Answer

A) a skimming pricing approach. 
B) a loss-leader pricing approach. 
C) a fixed-price policy. 
D) a penetration pricing approach. 
E) an everyday low pricing approach. 
A) a skimming pricing approach. 
B) a loss-leader pricing approach. 
C) a fixed-price policy. 
D) a penetration pricing approach. 
E) an everyday low pricing approach.

Question 13

To promote their business, some psychics advertise on television free tarot-card readings and other insights into their customers' futures. Unfortunately, this "free reading" has cost some unsuspecting callers as much as $700 in phone charges. This sort of pricing practice would be primarily monitored by the

Accepted Answer

A) Consumer Protection Agency. 
B) U.S. Department of Justice. 
C) Federal Trade Commission. 
D) Federal Communications Commission. 
E) Consumer Product Safety Commission. 
A) Consumer Protection Agency. 
B) U.S. Department of Justice. 
C) Federal Trade Commission. 
D) Federal Communications Commission. 
E) Consumer Product Safety Commission.

Question 14

Southern gardeners normally pay $5 for a two-cubic-foot bag of pine bark mulch that they buy at their local gardening-supply and home-improvement stores to keep the weeds down in their gardens. If the price being charged by a retailer is not within a narrow range that gardeners feel is appropriate, they will use substitutions-newspaper, grass clippings, or some other kind of covering. When pricing pine bark mulch, a garden-supply or home-improvement retailer should use

Accepted Answer

A) customary pricing. 
B) at-market pricing. 
C) loss-leader pricing. 
D) penetration pricing. 
E) bundle pricing. 
A) customary pricing. 
B) at-market pricing. 
C) loss-leader pricing. 
D) penetration pricing. 
E) bundle pricing.

Question 15

The key to setting a price for a product is finding an approximate price level to use as a reasonable starting point. Four common approaches to selecting an approximate price level are (1) demand-oriented, (2) cost-oriented, (3) __________, and (4) competition-oriented approaches.

Accepted Answer

A) stakeholder-oriented 
B) revenue-oriented 
C) profit-oriented 
D) distribution-oriented 
E) cause-oriented 
A) stakeholder-oriented 
B) revenue-oriented 
C) profit-oriented 
D) distribution-oriented 
E) cause-oriented

Question 16

Quantity discounts refers to

Accepted Answer

A) price reductions in unit costs for placing a larger order. 
B) price reductions for placing long-term pre-scheduled orders. 
C) price reductions to encourage retailers to stock inventory earlier than their normal demand would require. 
D) BOGOs. 
E) reductions in unit costs for taking merchandise that will soon be replaced by new and improved versions of the original product. 
A) price reductions in unit costs for placing a larger order. 
B) price reductions for placing long-term pre-scheduled orders. 
C) price reductions to encourage retailers to stock inventory earlier than their normal demand would require. 
D) BOGOs. 
E) reductions in unit costs for taking merchandise that will soon be replaced by new and improved versions of the original product.

Question 17

Advertising such as "Retail Value $100, Our Price $85" is deceptive if

Accepted Answer

A) a verified and substantial number of stores in the market area do not price the item at $100. 
B) even one store in that retail chain does not price the item at $100. 
C) a competitor is selling the same item for $75 on sale and the normal price is only $85. 
D) there is not enough product on hand at that price to satisfy the needs of the store's regular customer traffic. 
E) the markup on the original price is more than 200 percent. 
A) a verified and substantial number of stores in the market area do not price the item at $100. 
B) even one store in that retail chain does not price the item at $100. 
C) a competitor is selling the same item for $75 on sale and the normal price is only $85. 
D) there is not enough product on hand at that price to satisfy the needs of the store's regular customer traffic. 
E) the markup on the original price is more than 200 percent.

Question 18

Price fixing is illegal per se under the Sherman Act. What does per se mean?

Accepted Answer

A) according to 
B) in lieu of 
C) in regard to 
D) in and of itself 
E) without exception 
A) according to 
B) in lieu of 
C) in regard to 
D) in and of itself 
E) without exception

Question 19

List four of the eight demand-oriented approaches to selecting an approximate price level and define what they are.

Accepted Answer

Demand-oriented approaches are (1) skimm

Question 20

To reward wholesalers and retailers for the risk they accept in assuming increased inventory carrying costs, manufacturers offer

Accepted Answer

A) noncumulative discounts. 
B) cumulative discounts. 
C) trade discounts. 
D) seasonal discounts. 
E) functional discounts. 
A) noncumulative discounts. 
B) cumulative discounts. 
C) trade discounts. 
D) seasonal discounts. 
E) functional discounts.

Exam 14: Arriving at the Final Price

Price discrimination refers to

The practice of charging a very low price for a product with the intent of driving competitors out of business is referred to as

Another name for a fixed-price policy is

The retail price of fax machines has decreased from over $10,000 in the early 1970s to less than $100 today. This is due in large part to

Which of the following is a cost-oriented approach to pricing?

The pricing strategy that is almost the exact opposite of skimming pricing is

It is relatively easy to measure the incremental cost of a new advertising campaign; what is not as easy is

To encourage buyers to stock inventory earlier than their normal demand would require, manufacturers often use

Identifying pricing objectives and constraints occurs during __________ of the price-setting process.

All of the following statements regarding the legal and regulatory aspects of pricing are true except

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?

Tendollars.com offers thousands of gifts, all priced at $10. This is an example of

The key to setting a price for a product is finding an approximate price level to use as a reasonable starting point. Four common approaches to selecting an approximate price level are (1) demand-oriented, (2) cost-oriented, (3) __________, and (4) competition-oriented approaches.

Quantity discounts refers to

Advertising such as "Retail Value $100, Our Price $85" is deceptive if

Price fixing is illegal per se under the Sherman Act. What does per se mean?

List four of the eight demand-oriented approaches to selecting an approximate price level and define what they are.

To reward wholesalers and retailers for the risk they accept in assuming increased inventory carrying costs, manufacturers offer

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

Understanding Organizations As Customers

Understanding and Reaching Global Consumers and Markets

Marketing Research: From Customer Insights to Actions

Market Segmentation Targeting and Positioning

Developing New Products and Services

Managing Successful Products Services and Brands

Services Marketing

Building the Price Foundation

Managing Marketing Channels and Supply Chains

Retailing and Wholesaling

Integrated Marketing Communications and Direct Marketing

Advertising Sales Promotion and Public Relations

Using Social Media and Mobile Marketing to Connect With Consumers

Personal Selling and Sales Management

Implementing Interactive and Multichannel Marketing

Pulling It All Together: the Strategic Marketing Process

Financial Aspects of Marketing

Building an Effective Marketing Plan

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