Question 1

Discuss pricing strategies for service firms.

Accepted Answer

Service firms often suffer from the effects of vague,unfounded pricing procedures and frequently charge the going rate without any idea of their costs.A service firm must set a price based on the cost of materials used,labor involved,overhead,and a profit.The proper price reflects the total cost of providing a unit of service.

Question 2

For some customers,a higher price equals:

Accepted Answer

A) higher quality. 
B) greater perceived value. 
C) uniqueness. 
D) All of the above 
A) higher quality. 
B) greater perceived value. 
C) uniqueness. 
D) All of the above D

Question 3

Two factors that determine the effects of competitors' prices on a small business owner's pricing decisions are the location of the competitors and the nature of the competing goods.

Accepted Answer

A) True 
 B)False  True

Question 4

When developing a marketing approach to pricing,business owners must:

Accepted Answer

A) establish prices that are compatible with their customers' expectations and what they are willing to pay. 
B) compete solely on price. 
C) establish prices that are compatible with their customers' expectations and add a certain percentage to it. 
D) establish prices that are compatible with their customers' expectations and subtract a certain percentage to it. 
A) establish prices that are compatible with their customers' expectations and what they are willing to pay. 
B) compete solely on price. 
C) establish prices that are compatible with their customers' expectations and add a certain percentage to it. 
D) establish prices that are compatible with their customers' expectations and subtract a certain percentage to it.

Question 5

A variation of geographic pricing in which the small company sells its merchandise to customers on the condition that they pay all the shipping is called:

Accepted Answer

A) uniform delivered pricing. 
B) F)O.B.factory. 
C) zone pricing. 
D) discounts. 
A) uniform delivered pricing. 
B) F)O.B.factory. 
C) zone pricing. 
D) discounts.

Question 6

Price lining,leader pricing,and odd pricing are three geographic pricing strategies that can be used for established products.

Accepted Answer

A) True 
 B)False

Question 7

In general,entrepreneurs should avoid head-to-head price competition with other firms that can more easily achieve lower prices through lower cost structures.

Accepted Answer

A) True 
 B)False

Question 8

Multiple unit pricing is a technique used to simplify the pricing decision by setting the same price for items in the same line.

Accepted Answer

A) True 
 B)False

Question 9

________ pricing is when the base product is not functional without the appropriate accessory.

Accepted Answer

A) Captive-product 
B) Optional-product 
C) By-product 
D) None of the above 
A) Captive-product 
B) Optional-product 
C) By-product 
D) None of the above

Question 10

Because service firms have no quantitative pricing techniques available to them,they must charge the "going rate" for their services.

Accepted Answer

A) True 
 B)False

Question 11

Most service firms base their prices on:

Accepted Answer

A) fairly stable pricing policies. 
B) the cost of the service plus an estimate of the value they add in delivering the service. 
C) market surveys on their respective industries. 
D) an hourly basis for services rendered. 
A) fairly stable pricing policies. 
B) the cost of the service plus an estimate of the value they add in delivering the service. 
C) market surveys on their respective industries. 
D) an hourly basis for services rendered.

Question 12

The main advantage of cost-plus pricing is its simplicity.

Accepted Answer

A) True 
 B)False

Question 13

If an item costs a small business owner $15,and the desired markup on it is 60%,its retail price would be:

Accepted Answer

A) $24.00. 
B) $25.00. 
C) $37.50. 
D) $43.25. 
A) $24.00. 
B) $25.00. 
C) $37.50. 
D) $43.25.

Question 14

A seasonal discount is a price reduction designed to encourage shoppers to purchase merchandise before an upcoming season.

Accepted Answer

A) True 
 B)False

Question 15

The traditional method of product costing,absorption costing,is extremely useful in helping the manufacturer determine prices or the effect of price changes.

Accepted Answer

A) True 
 B)False

Question 16

Price wars usually begin when:

Accepted Answer

A) the economy is in turmoil. 
B) when there are more than 4 competitors. 
C) when one competitor believes that they can achieve a higher volume through lower price. 
D) small businesses enter the market dominated by bigger giants. 
A) the economy is in turmoil. 
B) when there are more than 4 competitors. 
C) when one competitor believes that they can achieve a higher volume through lower price. 
D) small businesses enter the market dominated by bigger giants.

Question 17

Explain the impact of competition on pricing strategy and what an entrepreneur should do about competitors' prices.

Accepted Answer

An important part of setting appropriate

Question 18

The problem with using ________ is that it clouds the true relationships among price,volume,and costs by including fixed expenses in unit cost.

Accepted Answer

A) full-absorption costing 
B) variable costing 
C) contribution margin costing 
D) break-even costing 
A) full-absorption costing 
B) variable costing 
C) contribution margin costing 
D) break-even costing

Question 19

The price floor is established:

Accepted Answer

A) by the firm's total cost. 
B) by the consumers. 
C) by the government. 
D) None of the above 
A) by the firm's total cost. 
B) by the consumers. 
C) by the government. 
D) None of the above

Question 20

The use of a credit card by small business customers costs the small business from 10 to 15 percent of the price of the product.

Accepted Answer

A) True 
 B)False

Exam 11: Pricing and Credit Strategies

Discuss pricing strategies for service firms.

For some customers,a higher price equals:

Two factors that determine the effects of competitors' prices on a small business owner's pricing decisions are the location of the competitors and the nature of the competing goods.

When developing a marketing approach to pricing,business owners must:

A variation of geographic pricing in which the small company sells its merchandise to customers on the condition that they pay all the shipping is called:

Price lining,leader pricing,and odd pricing are three geographic pricing strategies that can be used for established products.

In general,entrepreneurs should avoid head-to-head price competition with other firms that can more easily achieve lower prices through lower cost structures.

Multiple unit pricing is a technique used to simplify the pricing decision by setting the same price for items in the same line.

________ pricing is when the base product is not functional without the appropriate accessory.

Because service firms have no quantitative pricing techniques available to them,they must charge the "going rate" for their services.

Most service firms base their prices on:

The main advantage of cost-plus pricing is its simplicity.

If an item costs a small business owner $15,and the desired markup on it is 60%,its retail price would be:

A seasonal discount is a price reduction designed to encourage shoppers to purchase merchandise before an upcoming season.

The traditional method of product costing,absorption costing,is extremely useful in helping the manufacturer determine prices or the effect of price changes.

Price wars usually begin when:

Explain the impact of competition on pricing strategy and what an entrepreneur should do about competitors' prices.

The problem with using ________ is that it clouds the true relationships among price,volume,and costs by including fixed expenses in unit cost.

The price floor is established:

The use of a credit card by small business customers costs the small business from 10 to 15 percent of the price of the product.

Entrepreneurs: the Driving Force Behind Small Business

Ethics and Social Responsibility: Doing the Right Thing

Creativity and Innovation: Keys to Entrepreneurial Success

Strategic Management and the Entrepreneur

Choosing a Form of Ownership

Franchising and the Entrepreneur

Buying an Existing Business

New Business Planning Process: Feasibility Analysis,business Modeling,

Building a Bootstrap Marketing Plan

Creative Use of Advertising and Promotion

Global Marketing Strategies

E-Commerce and Entrepreneurship

Creating a Solid Financial Plan

Managing Cash Flow

Sources of Equity Financing

Sources of Debt Financing

Location,layout,and Physical Facilities

Supply Chain Management

Managing Inventory

Staffing and Leading a Growing Company

Management Succession and Risk Management Strategies in the Family Business

The Legal Environment: Business Law and Government Regulation

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