Exam 9: Pricing

The owner of a small restaurant that sells take-out fried chicken spends monthly amounts of $2,500 in rent, $500 in utilities, $750 in loan interest, $200 in insurance premium, and $250 for advertising on local buses.A bucket of take-out chicken is priced at $9.50.Unit variable costs for the bucket of chicken are $5.50. At what level of sales, in dollars of revenue, will the restaurant break even?

Which of the following types of pricing involves summing the total unit expenditure of providing a product or service and adding a specific amount to the expenditure to arrive at the price?

Sails Ahoy, a small company that makes model sailboat kits priced at $120 each, spends $45 on materials and $5 in labour to produce each kit.The company incurs monthly expenses of $1,000 for rent and insurance, $200 for heat and electricity, $500 for advertising, and $3,500 for the proprietor's salary.If Sails Ahoy sells 150 kits in a given month, its monthly profit will be _____.

The demand for a product falls as the prices of its substitutes fall.

Odd-even pricing is:

Which of the following is NOT one of the four general approaches to pricing:

Target profit pricing is:

Value is considered to be the ratio of perceived benefits to the price.

A high initial price used by companies to help recover research and development costs is called a _____ strategy.

Kate & Hark's, a custom kitchen cabinet store, has received a bulk order for the supply of 400 cabinets.The variable cost incurred is $200 per unit and the fixed cost is $44,000. If a target profit of 20 percent of sales is desired, what price should be charged for a typical cabinet section?

If consumers can easily find close substitutes for a good or service, the product's demand tends to be inelastic.

A shift in the demand curve means:

_____ refers to how sensitive consumer demand and the firm's revenues are to changes in the product's price.

Describe the pricing constraints a firm is likely to face.

In a flexible-price policy, prices are set based on individual buyers and purchase situations in light of demand, cost, and competitive factors.

Which of the following statements about the factors that influence demand is true?

Other things equal, if a firm finds the demand for one of its products is inelastic, it can increase its total revenues by _____.

_____ is the practice of charging a very low price for a product with the intent of driving competitors out of business.

Parell's, a shampoo manufacturer, carried an ad campaign where it asked television viewers to identify the hair that was shampooed and conditioned with Parell's products and the hair on which expensive salon hair-care products were used.The idea of the ad was to make the viewers realize that a person could not distinguish between the hair that used the comparatively cheaper Parell's brand from hair that used the very expensive salon brand.By making price its selling point, Parell's is most likely using _____.

Which of the following statements about cost-oriented approaches is true?