Question 1

Which of the following represents the final step in setting the right price of a product?

Accepted Answer

A)  Choose a price strategy to help determine a base price. 
B)  Fine-tune the base price with pricing tactics. 
C)  Establish pricing goals. 
D)  Estimate demand,costs,and profits.

Question 2

During the maturity stage of a product life cycle,distribution channels become a significant cost factor.

Accepted Answer

A) True 
 B)False

Question 3

Consumers determine value of the product on the basis of

Accepted Answer

A)  perceived satisfaction. 
B)  the opportunity cost to buy the product. 
C)  discounts availed. 
D)  what other people buy.

Question 4

Which of the following defines revenue?

Accepted Answer

A)  The price charged to customers multiplied by the number of units sold 
B)  Net profit after taxes divided by total assets 
C)  Profit minus expenses 
D)  Something that is given up in an exchange to acquire a good or service

Question 5

In the absence of other information,people typically assume that prices are higher because the products contain better materials,because they are made more carefully,or,in the case of professional services,because the provider has more expertise.

Accepted Answer

A) True 
 B)False

Question 6

In which stage of the product life cycle does price decrease as competition increases and inefficient,high-cost firms are eliminated?

Accepted Answer

A)  Growth stage 
B)  Maturity stage 
C)  Introductory stage 
D)  Decline stage

Question 7

_____ is a price tactic that charges freight costs from a given point,regardless of the city from which the goods are shipped.

Accepted Answer

A)  FOB origin pricing 
B)  Zone pricing 
C)  Uniform delivered pricing 
D)  Basing-point pricing

Question 8

The geographic pricing method that is a modification of uniform delivered pricing,divides the United States (or the total market)into segments,and charges a flat freight rate to all customers in that segment,is called ___________.

Accepted Answer

A)  FOB origin pricing 
B)  zone pricing 
C)  uniform delivered pricing 
D)  basing-point pricing

Question 9

Which of the following is a price tactic that uses odd-numbered prices to connote bargains and even-numbered prices to imply quality?

Accepted Answer

A)  One-part pricing 
B)  Price lining 
C)  Psychological pricing 
D)  Price skimming

Question 10

During off-season,the Rues Hotel offers a 25 percent discount on its rooms to attract guests.The Rues Hotel is demonstrating the ______.

Accepted Answer

A)  power of yield management systems 
B)  advantage of markup pricing 
C)  relationship between price and quality 
D)  use of price as a promotional tool

Question 11

__________ is the practice of offering a product line with several items at specific price points.

Accepted Answer

A)  Bait pricing 
B)  Price bundling 
C)  Odd-even pricing 
D)  Price lining

Question 12

Price promotion alone always creates a low price image.

Accepted Answer

A) True 
 B)False

Question 13

In which of the following cases is the elasticity of demand expected to be high?

Accepted Answer

A)  Substitutes are available. 
B)  A product price is significantly low relative to purchasing power. 
C)  Products are not durable. 
D)  The product has only one use.

Question 14

Fresnas Designs Inc.is a company known for its quality interior decorations,customized service,and affordable prices.Given the high demand for its service,Fresnas' management could price its products higher,but it prefers to price its products such that it will earn a reasonable revenue.Fresnas bases its pricing policy on _____.

Accepted Answer

A)  sales maximization 
B)  earning satisfactory profits 
C)  creating retained earnings 
D)  status quo pricing

Question 15

When there are many substitutes available in the market for a particular product,consumers

Accepted Answer

A)  have a hard time switching from one product to another,making demand more elastic. 
B)  have a hard time switching from one product to another,making demand more inelastic. 
C)  can easily switch from one product to another,making demand more elastic. 
D)  can easily switch from one product to another,making demand more inelastic.

Question 16

Which statement best describes a similarity between price fixing and predatory pricing?

Accepted Answer

A)  Both are illegal under the Federal Trade Commission Act. 
B)  Both are fine-tuning techniques that do not change the general price level. 
C)  Both typically discourage and block competition from entering a market. 
D)  Both may ignore demand or cost or both.

Question 17

Inelastic demand is a situation in which

Accepted Answer

A)  an increase or a decrease in price does not significantly affect the demand for a product. 
B)  prices are adjusted over time to maximize a company's revenues. 
C)  demand is created for new products by aggressive brand awareness campaigns. 
D)  a pricing objective maintains existing prices or meets the competition's prices.

Question 18

Which of the following refers to net profit after taxes divided by total assets?

Accepted Answer

A)  Return on investment (ROI) 
B)  Revenue 
C)  Profit 
D)  Price

Question 19

Identify a statement that is true of status quo pricing.

Accepted Answer

A)  It leads to optimal pricing of a product. 
B)  It requires serious planning and is difficult to implement. 
C)  It focuses on the demand for and the costs of a product. 
D)  It can lead to a pricing disaster.

Question 20

The ability to change prices very quickly,often in real time is known as ___________.

Accepted Answer

A)  dynamic pricing 
B)  status quo pricing 
C)  satisfactory pricing 
D)  pricing based on perceived satisfaction

Exam 19: Pricing Concepts

Which of the following represents the final step in setting the right price of a product?

During the maturity stage of a product life cycle,distribution channels become a significant cost factor.

Consumers determine value of the product on the basis of

Which of the following defines revenue?

In the absence of other information,people typically assume that prices are higher because the products contain better materials,because they are made more carefully,or,in the case of professional services,because the provider has more expertise.

In which stage of the product life cycle does price decrease as competition increases and inefficient,high-cost firms are eliminated?

_____ is a price tactic that charges freight costs from a given point,regardless of the city from which the goods are shipped.

The geographic pricing method that is a modification of uniform delivered pricing,divides the United States (or the total market) into segments,and charges a flat freight rate to all customers in that segment,is called ___________.

Which of the following is a price tactic that uses odd-numbered prices to connote bargains and even-numbered prices to imply quality?

During off-season,the Rues Hotel offers a 25 percent discount on its rooms to attract guests.The Rues Hotel is demonstrating the ______.

__________ is the practice of offering a product line with several items at specific price points.

Price promotion alone always creates a low price image.

In which of the following cases is the elasticity of demand expected to be high?

When there are many substitutes available in the market for a particular product,consumers

Which statement best describes a similarity between price fixing and predatory pricing?

Inelastic demand is a situation in which

Which of the following refers to net profit after taxes divided by total assets?

Identify a statement that is true of status quo pricing.

The ability to change prices very quickly,often in real time is known as ___________.