Question 1

Distinguish between value-based pricing and cost-based pricing.

Accepted Answer

The answer of Distinguish between value-based pricing and cost-based pricing....

Question 2

Which of the following is an internal factor that affects pricing decisions in a company?

Accepted Answer

A)  the nature of the market 
B)  the degree of inflation in the economy 
C)  the overall marketing strategy of the company 
D)  the forces of demand and supply in the market 
E)  consumers' perception of value

Question 3

Price setting is usually determined by ________ in large companies.

Accepted Answer

A)  the top managers 
B)  the external stakeholders 
C)  product managers 
D)  non-executive employees 
E)  the sales department

Question 4

________ pricing refers to offering just the right combination of quality and gratifying service at a fair price.

Accepted Answer

A)  Markup 
B)  Good-value 
C)  Cost-plus 
D)  Target profit 
E)  Break-even

Question 5

Why is markup pricing most likely popular?

Accepted Answer

A)  Sellers are more certain about demand than about costs. 
B)  Markup pricing tends to maximize market competition. 
C)  Markup pricing affords buyers greater bargaining power. 
D)  Sellers do not need to make frequent adjustments as demand changes. 
E)  Markup pricing is designed to set prices to break even on the costs of making and marketing a product.

Question 6

Mansfield Pharmaceuticals markets Zipro, an antibiotic. The firm has fixed costs of $1,000,000 and variable costs of $2 per bottle of 50 tablets priced at $10 per bottle. What is the break-even volume?

Accepted Answer

A)  25,000 
B)  55,000 
C)  100,000 
D)  115,000 
E)  125,000

Question 7

Markup pricing is used when a firm tries to determine the price at which it will break even or make the target return it is seeking.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following is true about the demand curve?

Accepted Answer

A)  A demand curve indicates the drop in the average per-unit production cost that comes with accumulated production experience. 
B)  A demand curve indicates the cost per unit of output in the long run. 
C)  A demand curve indicates the cost per unit of output in the short run. 
D)  In a monopoly, the demand curve does not indicate the total market demand resulting from different prices. 
E)  A demand curve shows the number of units the market will buy in a given time period at different prices that might be charged

Question 9

RedFin, a company marketing deep-sea diving equipment, charges very high prices for its products. Despite the availability of many low-priced products in the market, customers seem to prefer RedFin, which has earned a reputation for selling high-quality products. This exemplifies ________.

Accepted Answer

A)  a pure monopoly 
B)  an oligopoly 
C)  a nonprice position 
D)  break-even pricing 
E)  target costing

Exam 10: Pricing: Understanding and Capturing Customer Value