Question 1

The price of a product is influenced by:

Accepted Answer

A)  whether it is a new or an established product. 
B)  whether the product can be leased as well as purchased outright. 
C)  whether the product may be returned to the seller. 
D)  whether a trade-in is involved. 
E)  all of the above.

Question 2

A company in Singapore produces more ornamental fish than any other company in the world--nearly one-third of the world's pet guppies, tetras, goldfish, mollies, and other species. Small producers of tropical fish in other parts of the world would more than likely use a _____ pricing strategy.

Accepted Answer

A)  promotion-oriented 
B)  sales-oriented 
C)  customer-oriented 
D)  status quo-oriented 
E)  production-oriented

Question 3

Before Anthony went to the hardware store to buy a pair of fire-resistant gloves, his son asked him how much the gloves should cost. Anthony responded, "I think they should cost between $18 and $25." Between $18 and $25 is the:

Accepted Answer

A)  point of price elasticity. 
B)  cost-plus price. 
C)  marginal price. 
D)  point of price inelasticity. 
E)  expected price.

Question 4

K-Block cooking charts are poster-sized recipes designed to encourage children to cook. The recipe cards are sold in packages of four. Fixed costs for the company are $6,000, and variable costs per card are $1. A package of four cards is sold for $9.99. What is the marginal cost for making one more package of cards once the company has sold enough cards to break-even?

Accepted Answer

A)  $1.00 
B)  $4.00 
C)  $4.99 
D)  $5.99 
E)  $9.99

Question 5

Which of the following pricing strategies can the manager of the Roast 'n Brew coffeehouse follow if she believes the store should have a status quo-oriented goal?

Accepted Answer

A)  Price coffee at the same price as competition down the block. 
B)  Maximize return on investment during next year. 
C)  Engage in price wars when necessary. 
D)  Increase sales volume by 15 percent. 
E)  Earn five percent more profit than last year.

Question 6

Price elasticity of demand refers to the:

Accepted Answer

A)  responsiveness of quantity demanded to price changes. 
B)  the effect a new competitor has on total industry sales. 
C)  willingness of consumers to buy a particular product during periods of excess supply. 
D)  willingness of consumers to postpone buying a particular product during periods of excess demand. 
E)  range of prices within a product category.

Question 7

Kelly usually pays $6.75 for a particular brand of cat litter that has an additive deodorizer, but if a competitive brand that uses a baking soda additive to reduce odor goes on sale, she will buy the brand that costs less. In which distinct consumer segment based on price perceptions does Kelly belong in this instance?

Accepted Answer

A)  system beater 
B)  brand loyal 
C)  uninvolved 
D)  laggard 
E)  deal shopper

Question 8

_____ is the income derived from the sale of the last unit.

Accepted Answer

A)  Break-even price 
B)  Markup 
C)  Profit 
D)  Average revenue 
E)  Marginal revenue

Question 9

Which of the following is NOT a commonly used type of pricing objective?

Accepted Answer

A)  to break even 
B)  to maintain market share 
C)  to achieve a target return 
D)  to stabilize prices 
E)  to meet competition

Question 10

A product's base price is also called its _____ price.

Accepted Answer

A)  suggested manufacturer's retail 
B)  pioneering 
C)  list 
D)  break-even 
E)  markup

Question 11

What pricing method should a company that sells and installs in-ground swimming pools during the spring and summer use for patio and terrace repair it does during the off-season to keep its workers employed?

Accepted Answer

A)  expected pricing 
B)  cost-plus pricing 
C)  marginal cost pricing 
D)  price elasticity 
E)  price inelasticity

Question 12

Six ounces of Charlee's Gourmet Beef Jerky sell for $13.50. The fixed costs for its manufacturer totals $16,000, and each 6-ounce package of beef jerky has a variable cost of $9.50. In order to break even, this firm needs to sell _____ 6-ounce packages.

Accepted Answer

A)  696 
B)  1,186 
C)  1,683 
D)  4,000 
E)  8,000

Question 13

The two primary manufacturers of microprocessors are Intel and AMD. To get a foothold in the market, AMD introduced its microprocessors at a price much lower than comparable Intel processors. AMD used a _____ pricing objective.

Accepted Answer

A)  promotion-oriented 
B)  sales-oriented 
C)  distribution-oriented 
D)  status quo-oriented 
E)  production-oriented

Question 14

Which of the following companies will most likely set its price above the competitive level?

Accepted Answer

A)  a prestige store with distinctive products and exclusive distributorships 
B)  a large department store chain that specializes in self-service, cash-and-carry operations 
C)  a price follower in an oligopoly 
D)  a company that wants to engage in price competition 
E)  a firm using penetration pricing

Question 15

The exchange of a collection of salt and pepper shakers for a small end table is an example of barter.

Accepted Answer

A) True 
 B)False

Question 16

Consumers may view products priced below the competition as undifferentiated commodities.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following sayings could most closely reflect the philosophy of an organization that uses a sales-oriented goal?

Accepted Answer

A)  "An eye for an eye." 
B)  "Charge all that the traffic will bear." 
C)  "Grab a bigger slice of the pie." 
D)  "Keep your head down." 
E)  "Walk softly and carry a big stick."

Question 18

Aphrodite's manufactures and markets scents, which can be added to enhance plain bath oil or potpourri, used to cover unpleasant odors, or used in candle-making. Last year, sales were disappointing. The manufacturer decided to increase the price of each bottle of scent by approximately 25 percent. This increase in price resulted in a 20 percent increase in bottles sold. Aphrodite's apparently experienced:

Accepted Answer

A)  profit programming. 
B)  cost-plus perceptions. 
C)  leader pricing. 
D)  penetration pricing. 
E)  inverse demand.

Question 19

A bottle of Glenfiddich whisky that costs $21 in Germany, costs $35 in Denmark, $43 in Sweden, and $55 in Norway. The Scandinavian countries clamped down on liquor consumption after almost endemic abuse during the 19thcentury when the average Swede consumed 46 liters a year. It is not unusual for people to travel eight hours from Stockholm to Germany to stock up on beer, wine, and other spirits. The Scandinavian countries are uninterested in the _____ when setting prices.

Accepted Answer

A)  point of price elasticity 
B)  cost-plus price 
C)  marginal price 
D)  point of price inelasticity 
E)  expected price

Question 20

In price determination, given a particular selling price, the break-even point is where:

Accepted Answer

A)  profit is maximized. 
B)  sales volume is maximized. 
C)  marginal cost equals total sales. 
D)  marginal cost equals marginal revenue. 
E)  total costs of the product equals total sales revenue from the product.

Exam 12: Price Determination