Question 1

________ is the average markup required on all merchandise to cover the cost of items,incidental expenses,and a profit.

Accepted Answer

A) Initial markup 
B) Cost plus markup 
C) Direct markup 
D) Contributing margin 
A) Initial markup 
B) Cost plus markup 
C) Direct markup 
D) Contributing margin

Question 2

Two factors are vital to studying the effects of competition on a small firm's pricing policies:

Accepted Answer

A) the location of the competitors and the nature of the competing goods. 
B) the pricing. 
C) the location of the competitors and their marketing efforts. 
D) Both A and B 
A) the location of the competitors and the nature of the competing goods. 
B) the pricing. 
C) the location of the competitors and their marketing efforts. 
D) Both A and B

Question 3

________ is a technique in which a small firm marks down the price of a popular item below its normal price in an effort to increase customer traffic and to boost sales of other items.

Accepted Answer

A) Odd pricing 
B) Leader pricing 
C) Price lining 
D) Suggested retail pricing 
A) Odd pricing 
B) Leader pricing 
C) Price lining 
D) Suggested retail pricing

Question 4

The initial markup on a product is the total markup on all merchandise to cover the cost of the items and a reasonable profit.

Accepted Answer

A) True 
 B)False

Question 5

When a small business practices price lining,it most commonly carries lined merchandise in sets of ________ different ranges.

Accepted Answer

A) 2 
B) 3 
C) 4 
D) 5 
A) 2 
B) 3 
C) 4 
D) 5

Question 6

Small business owners get into trouble when determining their price floor when they:

Accepted Answer

A) focus on what the customer will pay. 
B) assume their costs are the same as their competitors'. 
C) begin to track financial ratios to determine what they are doing. 
D) use the price floor as the minimum price in their acceptable price range. 
A) focus on what the customer will pay. 
B) assume their costs are the same as their competitors'. 
C) begin to track financial ratios to determine what they are doing. 
D) use the price floor as the minimum price in their acceptable price range.

Question 7

Penetration pricing is a short-term pricing strategy and achieves tremendous profit.

Accepted Answer

A) True 
 B)False

Question 8

Define and explain the terms: price,price range,price ceiling,and price floor.Why is it important to keep these terms distinct in the entrepreneur's thinking?

Accepted Answer

The price range is the area between the

Question 9

The use of credit cards increases the probability,speed,and magnitude of customer spending.

Accepted Answer

A) True 
 B)False

Question 10

Even in the short run,a small business must set the price of a product at least equal to the ________ costs (per unit),or it must shut down.

Accepted Answer

A) fixed 
B) variable 
C) total 
D) invariable 
A) fixed 
B) variable 
C) total 
D) invariable

Question 11

Because installment credit is so profitable for the small business,most small businesses finance themselves.

Accepted Answer

A) True 
 B)False

Question 12

Most small business managers follow the manufacturer's suggested retail price when it is available.

Accepted Answer

A) True 
 B)False

Question 13

Contribution margin is the portion of sales revenue left after covering fixed expenses and a profit.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following factors is vital to determining the effects of competition on the small firm's pricing policies?

Accepted Answer

A) The competitor's location 
B) The availability of capital for production 
C) The form of ownership of the small business 
D) The type of outlet the business is 
A) The competitor's location 
B) The availability of capital for production 
C) The form of ownership of the small business 
D) The type of outlet the business is

Question 15

In most cases,a ________ pricing strategy is used to introduce relatively low priced goods into the market where no elite segment and little opportunity for differentiation exist.

Accepted Answer

A) skimming 
B) penetration 
C) geographic 
D) opportunistic 
A) skimming 
B) penetration 
C) geographic 
D) opportunistic

Question 16

Dotty has her competitors' price information.Her most effective use of that information would be to:

Accepted Answer

A) seek to match her competitors. 
B) undercut competitors' prices. 
C) create a premium image by setting her prices higher than competitors. 
D) use it as one variable in her pricing mix. 
A) seek to match her competitors. 
B) undercut competitors' prices. 
C) create a premium image by setting her prices higher than competitors. 
D) use it as one variable in her pricing mix.

Question 17

Which price strategy is mostly used for moving stale,outdated,damaged merchandise?

Accepted Answer

A) Markdown pricing 
B) Multiple pricing 
C) Bundling 
D) Skimming 
A) Markdown pricing 
B) Multiple pricing 
C) Bundling 
D) Skimming

Question 18

Tom is working on a pricing strategy for his company's new product line.In order to determine the price ceiling for these products,Tom needs to know:

Accepted Answer

A) what price range will work best. 
B) what his company's cost structures are. 
C) what his customers are willing to pay. 
D) what his competitors are charging. 
A) what price range will work best. 
B) what his company's cost structures are. 
C) what his customers are willing to pay. 
D) what his competitors are charging.

Question 19

Judith started her business in 1995.During the years,she sold different products she purchased from distributors and manufacturers.One day,she came up with a new product.She patented the product and got started to sell the product.What should be the objectives of her pricing strategies?

Accepted Answer

A) Get the product accepted 
B) Maintain market share as competition grows 
C) Earn a profit 
D) All of the above 
A) Get the product accepted 
B) Maintain market share as competition grows 
C) Earn a profit 
D) All of the above

Question 20

The price that business owners set depends on the desired image they want to create for their products or services.These images are:

Accepted Answer

A) discount. 
B) value. 
C) upscale. 
D) All of the above 
A) discount. 
B) value. 
C) upscale. 
D) All of the above

Exam 11: Pricing and Credit Strategies

________ is the average markup required on all merchandise to cover the cost of items,incidental expenses,and a profit.

Two factors are vital to studying the effects of competition on a small firm's pricing policies:

________ is a technique in which a small firm marks down the price of a popular item below its normal price in an effort to increase customer traffic and to boost sales of other items.

The initial markup on a product is the total markup on all merchandise to cover the cost of the items and a reasonable profit.

When a small business practices price lining,it most commonly carries lined merchandise in sets of ________ different ranges.

Small business owners get into trouble when determining their price floor when they:

Penetration pricing is a short-term pricing strategy and achieves tremendous profit.

Define and explain the terms: price,price range,price ceiling,and price floor.Why is it important to keep these terms distinct in the entrepreneur's thinking?

The use of credit cards increases the probability,speed,and magnitude of customer spending.

Even in the short run,a small business must set the price of a product at least equal to the ________ costs (per unit),or it must shut down.

Because installment credit is so profitable for the small business,most small businesses finance themselves.

Most small business managers follow the manufacturer's suggested retail price when it is available.

Contribution margin is the portion of sales revenue left after covering fixed expenses and a profit.

Which of the following factors is vital to determining the effects of competition on the small firm's pricing policies?

In most cases,a ________ pricing strategy is used to introduce relatively low priced goods into the market where no elite segment and little opportunity for differentiation exist.

Dotty has her competitors' price information.Her most effective use of that information would be to:

Which price strategy is mostly used for moving stale,outdated,damaged merchandise?

Tom is working on a pricing strategy for his company's new product line.In order to determine the price ceiling for these products,Tom needs to know:

Judith started her business in 1995.During the years,she sold different products she purchased from distributors and manufacturers.One day,she came up with a new product.She patented the product and got started to sell the product.What should be the objectives of her pricing strategies?

The price that business owners set depends on the desired image they want to create for their products or services.These images are:

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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