Question 1

A manufacturer of a digital video recorder (DVR)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 DVR?

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 
E) consumers are innovators

Question 2

Resale price maintenance was declared illegal in 1975 under the

Accepted Answer

A) Sherman Act. 
B) Consumer Goods Pricing Act. 
C) Robinson-Patman Act. 
D) Federal Trade Commission Act. 
E) Clayton Act.

Question 3

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 4

Five pricing practices are closely scrutinized because of potential unethical or illegal actions.They include: (1)price fixing; (2)price discrimination; (3)deceptive pricing; (4)geographical pricing;and (5)__________.

Accepted Answer

A) predatory pricing 
B) price discounting 
C) lateral price fixing 
D) regional rollbacks 
E) delayed payment penalties

Question 5

The two general methods for quoting prices related to transportation costs are uniformed delivered pricing and __________.

Accepted Answer

A) regional pricing 
B) flexible pricing 
C) mode of transportation pricing 
D) FOB origin pricing 
E) FOB destination pricing

Question 6

A penetration pricing policy is MOST LIKELY to be effective when

Accepted Answer

A) lowering the price has only a minor effect on increasing the sales volume and reducing the unit cost. 
B) many segments of the market are price sensitive. 
C) the high initial price will not attract competitors. 
D) customers interpret the high price as signifying high quality. 
E) enough prospective customers are willing to buy immediately at the high initial price to make these sales profitable.

Question 7

Determining cost,volume,and profit relationships would occur during __________ of the price-setting process.

Accepted Answer

A) Step 2 
B) Step 3 
C) Step 4 
D) Step 5 
E) Step 6

Question 8

A retailer purchased a gross (144)of silk shells each costing exactly $17 apiece.Although the only difference between the shells was color,when they were put on the floor,the primary colors were marked $25,the pastel colors were marked $28 dollars,and the black and white shells were marked $30.These prices were set most likely because

Accepted Answer

A) retailers using a price lining strategy will occasionally mark up items based on color,style,and expected consumer demand. 
B) fewer people buy black and white shells,so the retailer has to charge a higher price to break even. 
C) the retailer is using prestige pricing;black and white shells are more elegant. 
D) the primary colors were priced using a penetration strategy,the pastels were priced using a skimming strategy,and the black and white shells were priced using prestige pricing. 
E) price lining is essentially the same as above-,at-,or below market pricing.

Question 9

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 10

Consider Figure 14-9 above."A" represents which of the following legislative acts?

Accepted Answer

A) The Robinson-Patman Act 
B) The Clayton Act 
C) The Sherman Act 
D) The Federal Trade Commission Act 
E) The Consumer Goods Pricing Act

Question 11

Setting prices a few dollars or cents under an even number is referred to as __________.

Accepted Answer

A) odd-even pricing 
B) prestige pricing 
C) price lining 
D) above-,at-,or below-market pricing 
E) every day fair pricing

Question 12

Target profit pricing refers to

Accepted Answer

A) adjusting the price of a product so it is "in line" with that of its largest competitor. 
B) setting an annual target of a specific dollar volume of profit. 
C) setting the price of a line of products at a number of different price points. 
D) adding a fixed percentage to the cost of all items in a specific product class. 
E) setting prices to achieve a profit that is a specified percentage of production costs.

Question 13

Consider Figure 14-9 above."C" represents which of the following legislative acts?

Accepted Answer

A) The Robinson-Patman Act 
B) The Clayton Act 
C) The Sherman Act 
D) The Federal Trade Commission Act 
E) The Consumer Goods Pricing Act

Question 14

According to Figure 14-1 above,"D" represents which step in the price-setting process?

Accepted Answer

A) estimate demand and revenue 
B) select an approximate price level 
C) scan competitors for prices of similar products or services. 
D) determine cost,volume,and profit relationships 
E) establish the price range

Question 15

Manufacturers or even wholesalers make geographical adjustments to list or quoted prices to reflect

Accepted Answer

A) warehouse inventory carrying and loading costs. 
B) the cost of transportation of the products from seller to buyer. 
C) changes in price due to tariffs the Federal Trade Commission imposes on the transport of goods from the U.S. 
D) changes in price due to fuel excise taxes on inefficient diesel trucks. 
E) the need some firms have of recouping the costs of developing different versions of their products for different global markets.

Question 16

All of the following are demand-oriented approaches to selecting an approximate price level EXCEPT:

Accepted Answer

A) odd-even. 
B) yield management. 
C) customary. 
D) bundle. 
E) prestige.

Question 17

A construction company was offered a 3 percent reduction in price off all invoices from a lumber yard for paying them within 10 days of issue.The lumber yard was offering a

Accepted Answer

A) trade discount. 
B) cash discount. 
C) promotional allowance. 
D) rebate. 
E) flexible price.

Question 18

An ad campaign by Suave shampoo asked television viewers to identify the heads of hair of women who used Suave shampoo and conditioner and those that used the much more expensive salon hair-care products.The idea of the ad was that no one could tell which woman used the much cheaper Suave brand.By making price its selling point,Suave is MOST LIKELY using __________.

Accepted Answer

A) customary pricing 
B) loss-leader pricing 
C) prestige pricing 
D) skimming pricing 
E) below-market pricing

Question 19

A hardware store advertises a ⅜" Black and Decker Power Drill for $29.95.You enter the store intending to purchase the drill.The salesperson informs you that they are all sold out.She tells you that the "sale" drills were factory seconds and that if you are going to be doing any kind of serious woodworking,you should buy the Model 3309,which sells for $49.99.This scenario has elements of which type of illegal pricing practice?

Accepted Answer

A) predatory pricing 
B) price discrimination 
C) price fixing 
D) bait and switch 
E) conditional bargains

Question 20

Figure 14-2 above represents the four approaches to selecting an appropriate price level."A" represents which approach?

Accepted Answer

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

Exam 14: Arriving at the Final Price

A manufacturer of a digital video recorder (DVR) 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 DVR?