Question 1

Two or more competitors explicitly or implicitly setting prices is referred to as

Accepted Answer

A)  competitive collusion. 
B)  vertical price fixing. 
C)  horizontal price fixing. 
D)  lateral price fixing. 
E)  price cooperation.

Question 2

Price lining refers to

Accepted Answer

A)  charging different prices to different buyers for goods of like grade and quality. 
B)  setting a low initial price on a new product to appeal immediately to the mass market. 
C)  setting a market price for a product or product class based on a subjective feel for the competitors' price or market price as the benchmark. 
D)  setting prices a few dollars or cents under an even number. 
E)  setting the price of a line of products at a number of different specific pricing points.

Question 3

What are the six major steps involved in setting prices?

Accepted Answer

The answer of What are the six major steps involved...

Question 4

A pricing method where a supplier is reimbursed for all costs, regardless of what they may be, and also receives an agreed-on dollar amount of profit that is independent of the final cost of the project, is referred to as

Accepted Answer

A)  target return on investment pricing. 
B)  cost-plus-percentage-of-cost pricing. 
C)  target return on sales pricing. 
D)  experience-curve pricing. 
E)  cost-plus-fixed-fee pricing.

Question 5

To promote their business, some psychics advertise on television free tarot-card readings and other insights into their customers' futures. Unfortunately, this "free reading" has cost some unsuspecting callers as much as $700 in phone charges. This sort of pricing practice would be primarily monitored by the

Accepted Answer

A)  Consumer Protection Agency. 
B)  U.S. Department of Justice. 
C)  Federal Trade Commission. 
D)  Federal Communications Commission. 
E)  Consumer Product Safety Commission.

Question 6

Quantity discounts are

Accepted Answer

A)  price reductions in unit costs for placing a larger order. 
B)  price reductions for placing long-term pre-scheduled orders. 
C)  price reductions to encourage retailers to stock inventory earlier than their normal demand would require. 
D)  BOGOs. 
E)  reductions in unit costs for taking merchandise that will soon be replaced by new and improved versions of the original product.

Question 7

One problem in the interstate trucking industry is the number of trucks that return empty after making a delivery. There is a website where independent interstate truckers can look for loads to carry on their return trips, known as backhauls. Because the trucks would normally return empty, truckers who use this website to generate business they would not have had otherwise receive a reduced shipping rate. This reduced rate for a backhaul is an example of

Accepted Answer

A)  penetration pricing. 
B)  target pricing. 
C)  cost-plus pricing. 
D)  odd-even pricing. 
E)  yield management pricing.

Question 8

What is the difference between a fixed-price policy and a dynamic pricing policy?

Accepted Answer

The answer of What is the difference between a fixed-price...

Question 9

To encourage retailers to pay their bills quickly, manufacturers offer them

Accepted Answer

A)  quantity discounts. 
B)  cash discounts. 
C)  flexible pricing policies. 
D)  promotional allowances. 
E)  manufacturer's inducements.

Question 10

Skimming pricing refers to

Accepted Answer

A)  setting the lowest initial price possible when introducing a new or innovative product in order to "skim" sales from competitors. 
B)  setting the highest initial price that customers who really desire the product are willing to pay. 
C)  setting a low initial price on a new product to appeal immediately to the mass market. 
D)  the practice of replacing promotional allowances with higher manufacturer list prices. 
E)  setting a high price so that quality- or status-conscious consumers will be attracted to the product and buy it.

Question 11

Figure 14-5
-Figure 14-5 above shows the results of a spreadsheet simulation to select a price to achieve a target return on investment (ROI). What is the ROI for Scenario C?

Accepted Answer

A)  2% 
B)  5% 
C)  10% 
D)  14% 
E)  17%

Question 12

What pricing strategy did the National Aeronautics and Space Administration (NASA) use to pay Lockheed Martin for the Orion lunar spacecraft?

Accepted Answer

A)  cost-plus-percentage-of-cost pricing 
B)  experience-curve pricing 
C)  standard markup pricing 
D)  yield management pricing 
E)  cost-plus-fixed-fee pricing

Question 13

Standard markup pricing is considered to be a ________ approach to pricing.

Accepted Answer

A)  demand-oriented 
B)  profit-oriented 
C)  cost-oriented 
D)  competition-oriented 
E)  service-oriented

Question 14

The Robinson-Patman Act allows for price differentials to different customers under several conditions. Which of these practices would be permitted?

Accepted Answer

A)  using price differentials when price differences charged to different customers do not exceed the differences in the cost of manufacture, sale, or delivery resulting from different methods or quantities in which such goods are sold or delivered to buyers 
B)  using price differentials when price differences are given on the basis of other family businesses 
C)  using price differentials when charging different prices to different buyers for goods of like grade or quality 
D)  using price differentials when charging different prices on the basis of religious affiliation 
E)  using price differentials when charging the original price for refurbished goods that have been damaged or used and returned but repaired according to company specifications

Question 15

If the cash discount terms for a $500 purchase are 4/10 net 30, the number 4 refers to

Accepted Answer

A)  the percentage markup on the product. 
B)  the percentage discount if the bill is paid within 10 days. 
C)  the percentage increase in price if the bill is not paid within 10 days. 
D)  the discount in dollars per unit if the order is paid on time within 30 days. 
E)  the penalty in dollars if the bill is not paid within 10 days.

Question 16

Which profit-oriented pricing method is used because it establishes a benchmark to show how much of a firm's effort is needed to achieve a certain profit?

Accepted Answer

A)  experience-curve pricing 
B)  target return-on-sales pricing 
C)  standard markup pricing 
D)  target profit pricing 
E)  loss-leader pricing

Question 17

Setting one price for all buyers of a product or service is referred to as

Accepted Answer

A)  customary pricing. 
B)  a fixed-price policy. 
C)  a dynamic pricing policy. 
D)  standard markup pricing. 
E)  uniform pricing.

Question 18

Price deals that mislead consumers fall into the category of

Accepted Answer

A)  predatory pricing. 
B)  deceptive pricing. 
C)  price discrimination. 
D)  caveat emptor. 
E)  resale price maintenance.

Question 19

In some cases, penetration pricing may follow ________ pricing after price-insensitive customers have already purchased.

Accepted Answer

A)  experience-curve 
B)  target ROI 
C)  odd-even 
D)  above-market 
E)  skimming

Exam 14: Arriving at the Final Price