Question 1

Which of the following statements about the legal and regulatory aspect of pricing is most accurate?

Accepted Answer

A) The Robinson-Patman Act deals with predatory pricing. 
B) The Consumer Goods Pricing Act is the only federal legislation that deals directly with pricing issues. 
C) The Sherman Act deals only with vertical price fixing. 
D) The Federal Trade Commission Act deals with predatory pricing,deceptive pricing,and geographical pricing issues. 
E) The Consumer Goods Pricing Act and the Robinson-Patman Act deal with price discrimination.

Question 2

There are four common approaches to selecting an approximate price level.List and provide a brief description for each one.

Accepted Answer

The answer of There are four common approaches to selecting...

Question 3

Penetration pricing is considered to be a __________ approach to pricing.

Accepted Answer

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

Question 4

Which of the following statements about everyday low pricing (EDLP)is most accurate?

Accepted Answer

A) EDLP encourages manufacturer allowances. 
B) Supermarkets have hailed EDLP as the most effective form of value pricing. 
C) Some argue that EDLP without price specials is boring for many grocery shoppers. 
D) EDLP allows supermarkets to use deeply discounted price specials. 
E) EDLP can increase average retail prices by as much as 10 percent.

Question 5

The practice of charging a very low price for a product with the intent of driving competitors out of business is referred to as

Accepted Answer

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

Question 6

Setting an annual target of a specific dollar volume of profit is referred to as __________.

Accepted Answer

A) target profit pricing 
B) target return-on-investment pricing 
C) loss leader pricing 
D) at-,above-,or below-market pricing 
E) yield management pricing

Question 7

Vertical price fixing refers to

Accepted Answer

A) two or more competitors explicitly or implicitly setting prices. 
B) the practice of charging different prices to different buyers for goods of like grade and quality. 
C) controlling agreements between independent buyers and sellers whereby sellers are required not to sell products below a minimum retail price. 
D) a conspiracy among firms to set prices for a product or service. 
E) a seller's requirement that the purchaser of one product also buy another product in the line.

Question 8

A promotional allowance refers to

Accepted Answer

A) a one-time discount that must be used within a certain time frame or it expires. 
B) the cash payments or an extra amount of "free goods" awarded sellers in the marketing channel for undertaking certain advertising or selling activities to promote the product. 
C) the return of money based on proof of purchase. 
D) short-term price reductions when consumer demand takes a significant and unexpected dip. 
E) incentives,such as trips,cruises,jewelry,etc. ,presented to brand-loyal customers.

Question 9

Vizio's HDTVs are sold through all of the following types of retailers EXCEPT:

Accepted Answer

A) Amazon.com. 
B) mass merchandisers,such as Target. 
C) its own company stores. 
D) wholesale club stores such as Sam's Club. 
E) department stores such as Sears.

Question 10

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

Accepted Answer

A) set list or quoted price 
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 11

When Sherman bought gas,he noticed the convenience store offered him a 2 percent reduction in price if he paid cash rather than if he used his credit card to pay for his purchase.The convenience store was offering him a

Accepted Answer

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

Question 12

The retail price of mobile phones (unsubsidized)has decreased from $4,000 in 1983 when Motorola commercialized the device to less than $99 today as the volume increased from zero to millions of units sold.This is due in large part to which type of pricing approach?

Accepted Answer

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

Question 13

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

Accepted Answer

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

Question 14

The manager of a small gasoline station observes that while gasoline sales have been steady,the service side of the business has fallen off,and mechanics are often idle.He decides to offer a promotion-a $20 off coupon for an oil change that is to be mailed to 800 households within a two-mile radius from the gas station.The cost of printing and mailing is $1,000.The normal cost of an oil change is $40.Materials and labor per oil change costs $15.If 200 customers use the coupon,what will be the total profit of the promotion based on the profit equation?

Accepted Answer

A) ($4,000) 
B) ($1,000) 
C) $0 
D) $1,000 
E) $4,000

Question 15

The first Apple iPad was introduced in 2010 at an initial price of $650 for the 16 GB version.People waited in line overnight so they could be one of the first to own this unique tablet device.Which pricing strategy did Apple use to help recoup its research and development costs for the iPad?

Accepted Answer

A) price lining 
B) penetration pricing 
C) skimming pricing 
D) customary pricing 
E) target pricing

Question 16

When you buy a used car from a CarMax dealership,you are offered the car at a "no haggle" price.You can buy it or not,but there is no negotiating the published price because of the seller's

Accepted Answer

A) customary pricing strategy. 
B) fixed-price policy. 
C) uniform pricing policy. 
D) dynamic pricing policy. 
E) dynamic pricing strategy.

Question 17

Figure 14-1 above represents the six steps in setting price.Which letter represents the step where a firm would consider a demand-,cost-,profit-,or competition-oriented approach?

Accepted Answer

A) "B" 
B) "C" 
C) "D" 
D) "E" 
E) "F"

Question 18

Explain why odd-even pricing may be successful.

Accepted Answer

The answer of Explain why odd-even pricing may be successful....

Question 19

A skimming pricing policy is likely to be most effective when

Accepted Answer

A) consumers perceive your product to be similar to other products on the market. 
B) a lower price will significantly lower fixed costs. 
C) customers interpret the high price as signifying high quality. 
D) consumers tend to be price sensitive. 
E) it will be easier to set measurable sales unit goals.

Question 20

Prestige pricing 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 odd-even pricing. 
C) setting a market price for a product or product class based on a subjective feel for the competitors' price or market price. 
D) setting a high price so that quality- or status-conscious consumers will be attracted to the product and buy it. 
E) setting a price that is dictated by tradition,a standardized channel of distribution,or other competitive factors.

Exam 14: Arriving at the Final Price