Question 1

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)  the high initial price will not attract competitors.
C)  a low initial price discourages competitors from entering the market.
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 profitableF) B) and E)
G) B) and C)

Question 2

Hallmark was an official supplier at the Winter Olympics. Hallmark presented each Olympic winner with a special bouquet of roses designed to resemble the Olympic torch. Consumers could buy a smaller version of this bouquet at the Hallmark website for $74.95. The Olympic bouquet contained two dozen yellow roses, yet one could buy two dozen yellow roses for less than $35 at most supermarkets. With the Olympic bouquet Hallmark appealed to flower buyers that wanted to make a statement, so it used which demand-oriented pricing approach?

Accepted Answer

A)  bundle pricing
B)  yield management pricing
C)  skimming pricing
D)  target return-on-sales pricing
E)  penetration pricingF) B) and D)
G) B) and C)

Question 3

The pricing approach that: (1)  estimates the price that ultimate consumers would be willing to pay for a product; (2)  works backward through markups taken by retailers and wholesalers to determine what price to charge wholesalers; and (3)  results in the manufacturer deliberately adjusting the composition and features of the product to achieve the price to consumers is referred to as __________.

Accepted Answer

A)  cost-benefit pricing
B)  cost-plus percentage-of-cost pricing
C)  target pricing
D)  cost-plus fixed-fee pricing
E)  product feature pricingF) A) and B)
G) B) and E)

Question 4

Pricing constraints refer to

Accepted Answer

A)  barriers that must be overcome in order to set pricing objectives.
B)  competitive pricing advantages one firm has over another.
C)  different pricing strategies for each of the firm's products.
D)  factors that limit the range of prices a firm may set.
E)  barriers to entry a firm faces when launching a new product.F) A) and B)
G) A) and C)

Question 5

-In Figure 11-6 above, which is a break-even chart that depicts a graphic presentation of a break-even analysis for a picture frame store, the area CGD represents the firm's

Accepted Answer

A)  fixed costs.
B)  break-even point.
C)  variable costs.
D)  profit.
E)  total revenueF) A) and B)
G) B) and E)

Question 6

Which of the following statements about the factors that influence demand is true?

Accepted Answer

A)  As the availability of close substitutes increases, the demand for a product increases.
B)  As real consumer income increases, the demand for a product increases.
C)  As the price of close substitutes increases, the demand for a product declines.
D)  Changing consumer tastes have little impact on the demand for a product.
E)  As real consumer income decreases, the demand for a product increases.F) A) and E)
G) C) and D)

Question 7

Reductions from list or quoted prices to buyers for performing some activity are referred to as

Accepted Answer

A)  allowances.
B)  subsidies.
C)  remittances.
D)  noncumulative deductions.
E)  list price deductions.F) A) and B)
G) A) and E)

Question 8

Target pricing refers to

Accepted Answer

A)  a method of selecting specific prices wholesalers and retailers are willing to pay based upon the elasticity of each given item.
B)  a method of charging different prices to maximize revenue for a set amount of capacity at any given time.
C)  the practice of simultaneously increasing product and service benefits while maintaining or decreasing price.
D)  estimating the price that ultimate consumers would be willing to pay for a product, then working backward through markups taken by retailers and wholesalers to determine what price to charge wholesalers.
E)  a method of estimating the price that ultimate consumers would be willing to pay for a product, then determining how much wholesalers wish to charge its customers, deliberately adjusting the composition and features of the product to achieve the price to consumers.F) A) and C)
G) B) and C)

Question 9

What type of discount to resellers is based in part on where they are in the channel?

Accepted Answer

A)  seasonal discounts
B)  trade discounts
C)  cash discounts
D)  promotional allowances
E)  trade-in allowancesF) All of the above
G) B) and E)

Question 10

Swedish company Asko, which prides itself on manufacturing and marketing some of the best-built and most expensive appliances in the world, would probably use which competition-oriented pricing approach?

Accepted Answer

A)  customary pricing
B)  above-market pricing
C)  loss-leader pricing
D)  at-market pricing
E)  penetration pricingF) A) and D)
G) A) and E)

Question 11

All of the following statements about standard markup pricing are true EXCEPT:

Accepted Answer

A)  high-volume products usually have smaller markups than do low-volume products.
B)  the percentage markup depends on the type of retail store and the product involved.
C)  markups must cover all expenses of the store, pay for overhead costs, and contribute something to profits.
D)  summing the total unit cost of providing a product or service and adding a specific amount to the cost to arrive at a price.
E)  supermarket managers have such a large number of products that estimating the demand for each product as a means of setting price is impossibleF) A) and B)
G) A) and C)

Question 12

Which of the following is a profit-oriented pricing method?

Accepted Answer

A)  target return-on-sales pricing
B)  loss leader pricing
C)  above-, at-, or below-market pricing
D)  price lining
E)  penetration pricingF) All of the above
G) A) and D)

Question 13

When is skimming pricing an effective strategy?

Accepted Answer

Skimming pricing is an effective strateg...

Question 14

A maximizing current profit objective implies that a company chooses to

Accepted Answer

A)  set targets whose performance can be measured quickly.
B)  give up immediate profit in exchange for achieving a higher market share in hopes of penetrating competitive markets.
C)  set a profit goal that is often determined by its board of directors.
D)  reduce investment in any further market or product research.
E)  set prices based on return on sales.F) A) and D)
G) A) and C)

Question 15

Lady Marion Seafood, Inc. sells 5-pound packages of Alaskan salmon. Assume that its unit variable cost per package is $30 and its fixed cost is $250,000. It wants a target profit of $38,000 based on a volume of 16,000 packages. What should the firm charge for a 5-pound package of salmon?

Accepted Answer

A)  $25.00
B)  $33.94
C)  $40.00
D)  $48.00
E)  $61.25F) None of the above
G) A) and E)

Question 16

If you wanted to buy a McDonald's Big Mac, small fries, and a small drink separately, it will you cost you $6.19. However, if you purchased these three items together as part of the firm's Extra Value Meal package, you would pay only $4.39, savings 80 cents. This "Extra Value Meal" price serves as __________ to you and other consumers, who compare the costs and benefits of substitute items to a bundle containing those items.

Accepted Answer

A)  a marginal analysis
B)  a profit equation
C)  a reference value
D)  a break-even analysis
E)  price elasticity of demandF) C) and D)
G) B) and C)

Question 17

Three different objectives relate to a firm's profit, which have different implications for pricing strategy. The three profit-oriented objectives include managing for long-run profits, maximizing current profit objectives, and __________.

Accepted Answer

A)  accumulating profits
B)  reinvesting profits
C)  redistributing profits
D)  maximizing gross margin
E)  achieving a target returnF) A) and D)
G) C) and D)

Question 18

When estimating demand, price is not the only factor to be considered. Three other elements emphasized by economists are consumer tastes, price and availability of similar products, and

Accepted Answer

A)  consumer income.
B)  consumer psychographics.
C)  size of the target market.
D)  current political agendas.
E)  regulatory environment.F) C) and D)
G) C) and E)

Question 19

All of the following are legal or ethical considerations when setting a final price EXCEPT:

Accepted Answer

A)  price discrimination.
B)  predatory pricing.
C)  showrooming.
D)  price fixing.
E)  deceptive pricing.F) None of the above
G) C) and E)

Question 20

With profit-oriented approaches to pricing, a price setter may choose to balance both __________ and __________ to set price.

Accepted Answer

A)  revenue; profit
B)  tangible goods; services
C)  cost; revenue
D)  demand; supply
E)  cost; demandF) A) and B)
G) B) and E)

Exam 11: Pricing Products and Services

When is skimming pricing an effective strategy?

Correct Answer
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Skimming pricing is an effective strateg...
View Answer

Correct Answer
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What type of discount to resellers is based in part on where they are in the channel?

Correct Answer
verified

Which of the following is a profit-oriented pricing method?

Correct Answer
verified

Correct Answer
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-In Figure 11-6 above, which is a break-even chart that depicts a graphic presentation of a break-even analysis for a picture frame store, the area CGD represents the firm's

Correct Answer
verified

With profit-oriented approaches to pricing, a price setter may choose to balance both and to set price.

Correct Answer
verified

All of the following statements about standard markup pricing are true EXCEPT:

Correct Answer
verified

Which of the following statements about the factors that influence demand is true?

Correct Answer
verified

Three different objectives relate to a firm's profit, which have different implications for pricing strategy. The three profit-oriented objectives include managing for long-run profits, maximizing current profit objectives, and __________.

Correct Answer
verified

Swedish company Asko, which prides itself on manufacturing and marketing some of the best-built and most expensive appliances in the world, would probably use which competition-oriented pricing approach?

Correct Answer
verified

Correct Answer
verified

A penetration pricing policy is most likely to be effective when

Correct Answer
verified

Reductions from list or quoted prices to buyers for performing some activity are referred to as

Correct Answer
verified

A maximizing current profit objective implies that a company chooses to

Correct Answer
verified

All of the following are legal or ethical considerations when setting a final price EXCEPT:

Correct Answer
verified

Target pricing refers to

Correct Answer
verified

When estimating demand, price is not the only factor to be considered. Three other elements emphasized by economists are consumer tastes, price and availability of similar products, and

Correct Answer
verified

Lady Marion Seafood, Inc. sells 5-pound packages of Alaskan salmon. Assume that its unit variable cost per package is $30 and its fixed cost is $250,000. It wants a target profit of $38,000 based on a volume of 16,000 packages. What should the firm charge for a 5-pound package of salmon?

Correct Answer
verified

Pricing constraints refer to

Correct Answer
verified

Exam 11: Pricing Products and Services

When is skimming pricing an effective strategy?

Correct AnswerverifiedSkimming pricing is an effective strateg...View AnswerShow Answer

Correct AnswerverifiedShow Answer

What type of discount to resellers is based in part on where they are in the channel?

Correct AnswerverifiedShow Answer

Which of the following is a profit-oriented pricing method?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

-In Figure 11-6 above, which is a break-even chart that depicts a graphic presentation of a break-even analysis for a picture frame store, the area CGD represents the firm's

Correct AnswerverifiedShow Answer

With profit-oriented approaches to pricing, a price setter may choose to balance both __________ and __________ to set price.

Correct AnswerverifiedShow Answer

All of the following statements about standard markup pricing are true EXCEPT:

Correct AnswerverifiedShow Answer

Which of the following statements about the factors that influence demand is true?

Correct AnswerverifiedShow Answer

Three different objectives relate to a firm's profit, which have different implications for pricing strategy. The three profit-oriented objectives include managing for long-run profits, maximizing current profit objectives, and __________.

Correct AnswerverifiedShow Answer

Swedish company Asko, which prides itself on manufacturing and marketing some of the best-built and most expensive appliances in the world, would probably use which competition-oriented pricing approach?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A penetration pricing policy is most likely to be effective when

Correct AnswerverifiedShow Answer

Reductions from list or quoted prices to buyers for performing some activity are referred to as

Correct AnswerverifiedShow Answer

A maximizing current profit objective implies that a company chooses to

Correct AnswerverifiedShow Answer

All of the following are legal or ethical considerations when setting a final price EXCEPT:

Correct AnswerverifiedShow Answer

Target pricing refers to

Correct AnswerverifiedShow Answer

When estimating demand, price is not the only factor to be considered. Three other elements emphasized by economists are consumer tastes, price and availability of similar products, and

Correct AnswerverifiedShow Answer

Lady Marion Seafood, Inc. sells 5-pound packages of Alaskan salmon. Assume that its unit variable cost per package is $30 and its fixed cost is $250,000. It wants a target profit of $38,000 based on a volume of 16,000 packages. What should the firm charge for a 5-pound package of salmon?

Correct AnswerverifiedShow Answer

Pricing constraints refer to

Correct AnswerverifiedShow Answer

Correct Answer
verified
Skimming pricing is an effective strateg...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

With profit-oriented approaches to pricing, a price setter may choose to balance both and to set price.

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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