Question 1

Price lining occurs when a small company raises the price of all of its goods by the same percentage to cover operating expenses.

Accepted Answer

A) True 
 B)False

Question 2

The costs of merchandise used in computing markup include wholesale price,incidental costs,and profit minus any discounts.

Accepted Answer

A) True 
 B)False

Question 3

The Omega Company introduces products with a higher-than-normal price in an effort to quickly recover the initial developmental and promotional costs of the product.The Omega Company is pursuing a ________ pricing strategy.

Accepted Answer

A) fixed-price 
B) skimming 
C) penetration 
D) loss leader 
A) fixed-price 
B) skimming 
C) penetration 
D) loss leader

Question 4

When a retailer routinely prices goods at $9.97 and $7.36 rather than $10.00 and $7.50,the retailer is using:

Accepted Answer

A) variable pricing. 
B) penetration pricing. 
C) odd pricing. 
D) price skimming. 
A) variable pricing. 
B) penetration pricing. 
C) odd pricing. 
D) price skimming.

Question 5

To establish a reasonable,profitable price for service,the small business owner needs to know:

Accepted Answer

A) fixed and variable costs,the break-even point,and his/her contribution percentage. 
B) competitors' prices,and costs of direct and indirect labor. 
C) the cost of materials,direct labor,and overhead for each unit of service. 
D) full-absorption costs,direct and indirect labor,and the break-even point. 
A) fixed and variable costs,the break-even point,and his/her contribution percentage. 
B) competitors' prices,and costs of direct and indirect labor. 
C) the cost of materials,direct labor,and overhead for each unit of service. 
D) full-absorption costs,direct and indirect labor,and the break-even point.

Question 6

Geographical pricing includes numerous techniques,such as:

Accepted Answer

A) uniform delivered pricing. 
B) loss-leader pricing. 
C) markdowns. 
D) multiple pricing. 
A) uniform delivered pricing. 
B) loss-leader pricing. 
C) markdowns. 
D) multiple pricing.

Question 7

A skimming pricing strategy sets a relatively high price for a product to appeal to the segment of the market which is not sensitive to price.

Accepted Answer

A) True 
 B)False

Question 8

There are at least eight different pricing strategies for established goods and services.Explain four of those strategies and why you'd use them.

Accepted Answer

Pricing techniques for existing products

Question 9

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

Accepted Answer

A) True 
 B)False

Question 10

When a small business is faced with price competition from a much larger competitor,it should consider:

Accepted Answer

A) going head-to-head on prices by lowering its cost structure. 
B) using non-price competition by offering value added service. 
C) make rapid,continual price changes to keep the competition off balance. 
D) move to a premium price strategy by offering higher scale goods and services. 
A) going head-to-head on prices by lowering its cost structure. 
B) using non-price competition by offering value added service. 
C) make rapid,continual price changes to keep the competition off balance. 
D) move to a premium price strategy by offering higher scale goods and services.

Question 11

________ is a pricing strategy under which local customers "subsidize" the shipping charges the firm incurs when transporting merchandise to distant customers.

Accepted Answer

A) FOB factory pricing 
B) Uniform delivered pricing 
C) Zone pricing 
D) Opportunistic pricing 
A) FOB factory pricing 
B) Uniform delivered pricing 
C) Zone pricing 
D) Opportunistic pricing

Question 12

If a haberdasher purchases a tie for $12 and plans to sell it for $18,the percentage of retail price markup would be:

Accepted Answer

A) 33%. 
B) 50%. 
C) 175%. 
D) 100%. 
A) 33%. 
B) 50%. 
C) 175%. 
D) 100%.

Question 13

Which of the following is correct?

Accepted Answer

A) Sales - variable costs - fixed costs = contribution margin 
B) Total revenue - variable costs = contribution margin 
C) Total revenue - fixed costs = contribution margin 
D) Total revenue - profit = contribution margin 
A) Sales - variable costs - fixed costs = contribution margin 
B) Total revenue - variable costs = contribution margin 
C) Total revenue - fixed costs = contribution margin 
D) Total revenue - profit = contribution margin

Question 14

Many small business owners use a ________ strategy to move stale,damaged,or slow moving goods or to encourage shoppers to purchase merchandise before an upcoming season.

Accepted Answer

A) multiple pricing 
B) opportunistic pricing 
C) discount pricing 
D) price lining 
A) multiple pricing 
B) opportunistic pricing 
C) discount pricing 
D) price lining

Question 15

A retailer who buys a product for $19.75 and has a desired markup of retail price of 55% should establish a retail price of $43.89.

Accepted Answer

A) True 
 B)False

Question 16

Under uniform delivered pricing,a company charges all of its customers the same price,even though the cost of selling or transporting the merchandise varies.

Accepted Answer

A) True 
 B)False

Question 17

Proper pricing is a balancing act,walking between a high enough price to cover profit margins and convey the right image and low enough to attract customers.

Accepted Answer

A) True 
 B)False

Question 18

A new product ________ pricing strategy is often used in markets with little competition and when the company seeks to recover start-up costs quickly.

Accepted Answer

A) penetration 
B) skimming 
C) discount 
D) sliding-down-the-demand-curve 
A) penetration 
B) skimming 
C) discount 
D) sliding-down-the-demand-curve

Question 19

Non-price competition is using personal service,free delivery,and other extras to attract and keep customers without changing prices.

Accepted Answer

A) True 
 B)False

Question 20

When pricing products,it is important to remember that:

Accepted Answer

A) there is an ideal price that customers will pay for a given product or service. 
B) once the acceptable price range is found,prices should not be changed again. 
C) pricing is more an intuitive than a quantitative process. 
D) a customer orientation in price setting is most important. 
A) there is an ideal price that customers will pay for a given product or service. 
B) once the acceptable price range is found,prices should not be changed again. 
C) pricing is more an intuitive than a quantitative process. 
D) a customer orientation in price setting is most important.

Exam 11: Pricing and Credit Strategies

Price lining occurs when a small company raises the price of all of its goods by the same percentage to cover operating expenses.

The costs of merchandise used in computing markup include wholesale price,incidental costs,and profit minus any discounts.

The Omega Company introduces products with a higher-than-normal price in an effort to quickly recover the initial developmental and promotional costs of the product.The Omega Company is pursuing a ________ pricing strategy.

When a retailer routinely prices goods at $9.97 and $7.36 rather than $10.00 and $7.50,the retailer is using:

To establish a reasonable,profitable price for service,the small business owner needs to know:

Geographical pricing includes numerous techniques,such as:

A skimming pricing strategy sets a relatively high price for a product to appeal to the segment of the market which is not sensitive to price.

There are at least eight different pricing strategies for established goods and services.Explain four of those strategies and why you'd use them.

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

When a small business is faced with price competition from a much larger competitor,it should consider:

________ is a pricing strategy under which local customers "subsidize" the shipping charges the firm incurs when transporting merchandise to distant customers.

If a haberdasher purchases a tie for $12 and plans to sell it for $18,the percentage of retail price markup would be:

Which of the following is correct?

Many small business owners use a ________ strategy to move stale,damaged,or slow moving goods or to encourage shoppers to purchase merchandise before an upcoming season.

A retailer who buys a product for $19.75 and has a desired markup of retail price of 55% should establish a retail price of $43.89.

Under uniform delivered pricing,a company charges all of its customers the same price,even though the cost of selling or transporting the merchandise varies.

Proper pricing is a balancing act,walking between a high enough price to cover profit margins and convey the right image and low enough to attract customers.

A new product ________ pricing strategy is often used in markets with little competition and when the company seeks to recover start-up costs quickly.

Non-price competition is using personal service,free delivery,and other extras to attract and keep customers without changing prices.

When pricing products,it is important to remember that:

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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