Question 1

Shell Oil recently exchanged one million pest-control devices for sugar from a Caribbean country.This practice is referred to as:

Accepted Answer

A) commission. 
B) price. 
C) barter. 
D) tariff.

Question 2

An established provider of high-definition television service does not like the new startup that has decided to offer HD television in the same market area.As such,the established provider lowers their prices to half of what the new startup is charging,in hopes of forcing them into bankruptcy.This activity is known as:

Accepted Answer

A) Price fixing 
B) Price discrimination 
C) Predatory pricing 
D) Deceptive pricing

Question 3

The retail price of laser printers has decreased from $900 to less than $200 over several years.This is due in large part to:

Accepted Answer

A) skimming pricing. 
B) prestige pricing. 
C) odd-even pricing. 
D) experience curve pricing.

Question 4

When Coca-Cola considers their variable production costs,fixed costs,and revenue,they begin making money when revenue is 85 percent of total costs.This is referred to as their:

Accepted Answer

A) break-even point. 
B) point of maximum profit. 
C) coverage amount. 
D) incremental return quantity.

Question 5

Most consumers expect a litre of milk to cost anywhere between $1-$3 dollars depending on if it is organic or not.Knowing this consumer expectation,a new dairy will probably charge consumers within this price range for their milk.This new dairy is engaging in:

Accepted Answer

A) Standard markup pricing 
B) Cost-plus-percentage-of-cost pricing 
C) Customary pricing 
D) Experience curve pricing

Question 6

There are a lot of skateboards on the market,but the BMW Streetcarver is the only one with stabilizers and wheel design based on BMW's automobile.This technology gives the BMW Streetcarver better control at high speeds and around sharp turns than any other brand.The skateboard is priced at $495,which leaves many consumers (especially young males)who might want to buy the Streetcarver unable to afford it.This inability to pay for the high-priced BMW-made skateboard shows the effects of _____ on sales.

Accepted Answer

A) demand factors 
B) macroeconomic environmental factors 
C) the consumer index 
D) supply factors

Question 7

If competitive market circumstances are such that there is no price competition,no product differentiation,and the purpose of advertising is to increase demand for the product class,then _____ must exist in the industry.

Accepted Answer

A) a pure monopoly 
B) an oligopoly 
C) monopolistic competition 
D) pure competition

Question 8

Mrs.Renfro's,Inc.,is a company that sells 25 different relishes in 45 different states.Mrs.Renfro's chipotle corn salsa is so popular that the company cannot make enough to keep its resellers stocked.Its price of $4.50 for a jar seems just right to consumers who savour its hot and spicy taste.The popularity of hot and spicy food is an example of a(n)_____ that Mrs.Renfro's has used to make its product a success.

Accepted Answer

A) exchange parameter 
B) demand factor 
C) supply factor 
D) consumer index

Question 9

In the early 1980s,typical round trip coach fares from the East Coast to London were over $500.Then Freddie Laker introduced a competing service into Newark at $350.Major airlines matched his price-and continued to do so until they drove Laker out of business.Then prices shot back up to over $500.A lawsuit filed under the Sherman Act resulted in the judgment that the major airlines had explicitly tried to destroy a competitor.Laker's experience is an example of:

Accepted Answer

A) price fixing. 
B) price discrimination. 
C) predatory pricing. 
D) deceptive pricing.

Question 10

Which of the following statements about price elasticity of demand is true?

Accepted Answer

A) Price elasticity with unitary demand is less than 1. 
B) The more substitutes a product has, the less likely it is to be price elastic. 
C) With inelastic demand, a reduction in price increases total revenue. 
D) With inelastic demand, price elasticity is less than 1.

Question 11

Explain why Sears may sell their Craftsman radial alarm saw for $499.99 instead of $500.00.

Accepted Answer

The answer of Explain why Sears may sell their Craftsman...

Question 12

When George and Arthurine Renfro decided to start a family business in 1990 and market chowchow,a southern regional food,they had to determine how they would price the chowchow by examining the demand for the product (would people rather eat home-made or store-bought),the cost of getting the jars for bottling the chowchow,and how much it would cost to distribute the product to area stores.In other words,the Renfros had to begin the development of their pricing strategy by:

Accepted Answer

A) identifying pricing constraints. 
B) estimating break-even points and revenue points. 
C) setting list price. 
D) selecting an approximate price level.

Question 13

Offering social media discounts for users who tweet a certain hashtag,repost a picture,or email an offer out to ten friends can help a company:

Accepted Answer

A) generate greater word of mouth 
B) market share 
C) pricing flexibility 
D) customer service support

Question 14

Figure: 13-3 
-In Figure 13-3,column "D" represents which type of competitive market?

Accepted Answer

A) Pure monopoly 
B) Oligopoly 
C) Monopolistic competition 
D) Pure competition

Question 15

The manufacturer of a Blu-Ray-R,a recordable Blu-Ray disk that can be erased and reused,is thinking of using a skimming pricing strategy for its new product.Which of the following conditions would argue AGAINST using a skimming pricing strategy for the Blu-Ray disks?

Accepted Answer

A) large potential market, even at a high price 
B) technological problems still exist for competitors 
C) increasing volume reduces production costs substantially 
D) consumers perceive a price-quality relationship

Question 16

Montreal bases Yellow Pages Group,publisher of the Yellow Pages,suggests that for every dollar an advertiser invests in the Yellow Pages,this will return to them on average twenty six dollars in sales.The Yellow pages,however suggests that different categories will have higher returns.Based on this they will charge according to the category.What pricing policy is the Yellow Pages following?

Accepted Answer

A) skimming policy 
B) penetration policy 
C) target policy 
D) flexible price policy

Question 17

Everyday low pricing (EDLP)is the practice of replacing __________ with lower manufacturer list prices.

Accepted Answer

A) discounts 
B) promotional allowances 
C) trade allowances 
D) trade discounts

Question 18

Tim Marlow,the owner of The Clock Works,wanted to know how many clocks he must sell in order to cover his fixed cost at a given price.Tim knew that he had a fixed cost of $20,000 for equipment,taxes,and a bank loan.He also had a unit variable cost of $20 per clock for labour,materials,and promotional costs.If the price Tim charges for each of his clocks is $40,what is his break-even point quantity?

Accepted Answer

A) 10 clocks 
B) 100 clocks 
C) 1,000 clocks 
D) 10,000 clocks

Question 19

Rents,executive salaries,and insurance are examples of typical:

Accepted Answer

A) variable costs. 
B) fixed costs. 
C) dividends. 
D) liquidity payments.

Question 20

You can buy a General Electric dishwasher for $399,or you can buy a similar sized under-the-counter Bosch brand dishwasher for $989.Since Bosch uses its pricing strategy to project a product image,it is most likely using _____ pricing.

Accepted Answer

A) bait and switch 
B) standard markup 
C) prestige 
D) penetration

Exam 13: Pricing Products and Services