Question 1

One of the traps of instituting a price decrease is when that low price buys market share in the short term.The same customers will shift to any lower-priced product that may come along.This trap is called ________.

Accepted Answer

A) low-price trap 
B) market-loyalty trap 
C) shallow-pockets trap 
D) low-quality trap 
E) fragile-market-share trap

Question 2

Despite its weaknesses,markup pricing remains popular for which of the following reasons?

Accepted Answer

A) Sellers can determine demand much more easily than they can estimate costs. 
B) By tying the price to cost,sellers make the pricing task more nuanced. 
C) When all firms in the industry use markup pricing,price competition flourishes. 
D) Sellers take advantage of buyers when the latter's demand becomes acute. 
E) Many people feel that cost-plus pricing is fairer to both buyers and sellers.

Question 3

The Internet is largely a one-sided tool that benefits buyers,but not sellers.

Accepted Answer

A) True 
 B)False

Question 4

Texas Instruments builds a large plant to produce a great quantity of products,hoping that as prices decline,sales volume increases and thus costs decline.This market-penetration pricing is dependent upon three conditions existing in the marketplace.Which one of the following is NOT one of these conditions?

Accepted Answer

A) Low price discourages competition from entering the market. 
B) Production and distribution costs actually fall with increases in production. 
C) Low prices does not increase consumer demand but increases retailer competition. 
D) The market is stimulated by lower prices. 
E) The market is highly price sensitive.

Question 5

When the salesperson at the local luxury car dealer pitches a customer on the dealer's "free maintenance for 36 months or 36,000 miles whichever comes first," the salesperson is trying to overcome the car's initial high cost by using what method?

Accepted Answer

The answer of When the salesperson at the local luxury...

Question 6

Although consumers may have fairly good knowledge of the range of prices involved,very few can accurately recall specific prices of products.

Accepted Answer

A) True 
 B)False

Question 7

Research has shown that consumers tend to process prices in a "left-to-right" manner rather than by rounding.With this knowledge,which of the following prices would seem to be a better physiological price?

Accepted Answer

A) $101.99 
B) $109.50 
C) $99.99 
D) $100.00 
E) none of the above

Question 8

In one type of ________,the auctioneer announces a high price for a product and then slowly decreases the price until a bidder accepts the price.

Accepted Answer

A) ascending auction 
B) English auction 
C) sealed-bid auction 
D) going-rate auction 
E) Dutch auction

Question 9

Your company has recently sold its resin-producing plant in India to a local concern.As part of the sales price,your company agrees to accept as partial payment the production of the resin at an agreed upon price for six years.This is an example of what type of countertrade?

Accepted Answer

The answer of Your company has recently sold its resin-producing...

Question 10

A company's costs take two forms.________ are costs that do not vary with production or sales revenue.

Accepted Answer

A) Fixed costs 
B) Variable costs 
C) Adjusted costs 
D) Attributed costs 
E) Unknown costs

Question 11

In target-return pricing,the firm determines the markup required and adds that amount to the fixed cost of the product.

Accepted Answer

A) True 
 B)False

Question 12

The concept of the lowest ________ means that a seller can charge a higher price if they can convince the customers that price is only a small part of the total cost of obtaining,operating,and servicing the product over its lifetime.

Accepted Answer

A) prestige pricing 
B) total cost of ownership 
C) convenience pricing 
D) key price points 
E) none of the above

Question 13

Companies often raise their prices by more than the inflationary cost increases as preparation for further inflation or government price controls.This practice is known as ________.

Accepted Answer

A) anticipatory pricing 
B) delayed quotation pricing 
C) escalator pricing 
D) unbundling 
E) discount pricing

Question 14

The definition of ________ prices is: In considering an observed price,consumers often compare it to an internal memory reference price or an external frame of reference (such as a posted "regular retail price").

Accepted Answer

A) historical 
B) reference 
C) promotional 
D) everyday low price 
E) none of the above

Question 15

The seller sells a plant,equipment,or technology to another country and agrees to accept as partial payment products manufactured with the supplied equipment in a ________.

Accepted Answer

A) buyback arrangement 
B) co-optation 
C) barter 
D) offset 
E) none of the above

Question 16

Auction-type pricing is becoming very popular due to the Internet.The three types of auction pricing include sealed-bid auctions,descending bids auctions,and ________.

Accepted Answer

A) EDLP auctions 
B) ascending bid auctions 
C) high-low bid auctions 
D) going-rate bidding auctions 
E) value pricing auctions

Question 17

When supermarkets and department stores drop the price on well-known brands to stimulate store traffic,this is called ________.

Accepted Answer

A) EDLP 
B) loss-leader pricing 
C) special-event pricing 
D) net pricing 
E) none of the above

Question 18

At 1,000 calculators per day,Texas Instrument's factory is running at full capacity.This means that the cost of each calculator is now at its ________ cost.

Accepted Answer

A) total 
B) average 
C) lowest 
D) highest 
E) undetermined

Question 19

________ is the direct exchange of goods,with no money and no third party involved.

Accepted Answer

A) Co-optation 
B) Buyback 
C) Barter 
D) Offset 
E) Compensation

Question 20

If variable costs are $10 per unit,fixed costs are $300,000,and expected unit sales are 50,000,the unit cost is ________.

Accepted Answer

A) $16.00 
B) $6.00 
C) $20.00 
D) $10.00 
E) none of the above

Exam 14: Developing Pricing Strategies and Programs

One of the traps of instituting a price decrease is when that low price buys market share in the short term.The same customers will shift to any lower-priced product that may come along.This trap is called ________.

Despite its weaknesses,markup pricing remains popular for which of the following reasons?

The Internet is largely a one-sided tool that benefits buyers,but not sellers.

When the salesperson at the local luxury car dealer pitches a customer on the dealer's "free maintenance for 36 months or 36,000 miles whichever comes first," the salesperson is trying to overcome the car's initial high cost by using what method?

Although consumers may have fairly good knowledge of the range of prices involved,very few can accurately recall specific prices of products.

Research has shown that consumers tend to process prices in a "left-to-right" manner rather than by rounding.With this knowledge,which of the following prices would seem to be a better physiological price?

In one type of ________,the auctioneer announces a high price for a product and then slowly decreases the price until a bidder accepts the price.

Your company has recently sold its resin-producing plant in India to a local concern.As part of the sales price,your company agrees to accept as partial payment the production of the resin at an agreed upon price for six years.This is an example of what type of countertrade?

A company's costs take two forms.________ are costs that do not vary with production or sales revenue.

In target-return pricing,the firm determines the markup required and adds that amount to the fixed cost of the product.

The concept of the lowest ________ means that a seller can charge a higher price if they can convince the customers that price is only a small part of the total cost of obtaining,operating,and servicing the product over its lifetime.

Companies often raise their prices by more than the inflationary cost increases as preparation for further inflation or government price controls.This practice is known as ________.

The definition of ________ prices is: In considering an observed price,consumers often compare it to an internal memory reference price or an external frame of reference (such as a posted "regular retail price") .

The seller sells a plant,equipment,or technology to another country and agrees to accept as partial payment products manufactured with the supplied equipment in a ________.

Auction-type pricing is becoming very popular due to the Internet.The three types of auction pricing include sealed-bid auctions,descending bids auctions,and ________.

When supermarkets and department stores drop the price on well-known brands to stimulate store traffic,this is called ________.

At 1,000 calculators per day,Texas Instrument's factory is running at full capacity.This means that the cost of each calculator is now at its ________ cost.

________ is the direct exchange of goods,with no money and no third party involved.

If variable costs are $10 per unit,fixed costs are $300,000,and expected unit sales are 50,000,the unit cost is ________.