Question 1

Economists have identified four types of competitive markets,which are

Accepted Answer

A)   capitalistic, monopolistic, socialist, and communist.
B)   pure monopoly, monopolistic competition, oligopoly, and pure competition.
C)   free market, restrained market, government-regulated, and command economy.
D)   market economy, command economy, traditional economy, and controlled economy.
E)   open market, consumer-dominated market, service market, and product market.F) D) and E)
G) B) and D)

Question 2

Inelastic demand exists when

Accepted Answer

A)   a small percentage decrease in price produces a smaller percentage increase in quantity demanded and total revenue falls.
B)   a small percentage increase in price produces a smaller percentage increase in quantity demanded and total revenue falls.
C)   an increase in price causes a larger increase in quantity demanded and total revenue falls to zero.
D)   the quantity demanded remains the same regardless of level of price and total revenue is unchanged.
E)   a small percentage decrease in price produces a smaller percentage decrease in quantity demanded and total revenue increases.F) A) and B)
G) A) and D)

Question 3

Which of the following statements would most likely be spoken during Step 3 in the price-setting process?

Accepted Answer

A)   "In order to break even, we will need to sell at least 500,000 units."
B)   "We have to try to achieve an 8 percent profit share."
C)   "The starting price should be $4.99 and we can raise the price again in six months."
D)   "But, if we increase the price even by one dollar, how many customers will we lose?"
E)   "We should probably price the extra large version somewhere between $600 and $650."F) B) and D)
G) C) and D)

Question 4

Which of the following would be an example of a constraint in Step 1 of the price-setting process?

Accepted Answer

A)   "We can rely on our reputation for our other products in the line."
B)   "Experts are predicting a surge in global demand."
C)   "We need to make allowances for large quantity orders."
D)   "We should increase the price during the holiday shopping season."
E)   "Remember, we don't know what the selective demand for this new product will be."F) None of the above
G) C) and E)

Question 5

Factors that limit the range of prices a firm may set are referred to as __________.

Accepted Answer

A)   pricing restraints
B)   pricing constraints
C)   demand factors
D)   pricing barriers
E)   pricing restrictionsF) B) and C)
G) A) and B)

Question 6

Marginal cost refers to

Accepted Answer

A)   the sum of the expenses of the firm that are stable and do not change with the quantity of a product that is produced and sold.
B)   the sum of the expenses of the firm that vary directly with the quantity of a product that is produced and sold.
C)   the total expense incurred by a firm in producing and marketing a product, which equals the sum of fixed cost and variable cost.
D)   the average amount of money received for selling one unit of a product or simply the price of that unit.
E)   the change in total cost that results from producing and marketing one additional unit of product.F) A) and B)
G) B) and C)

Question 7

Which of the following statements is most accurate?

Accepted Answer

A)   For some products, price influences the perception of overall quality, and ultimately value, to consumers.
B)   A consumer's view of a product's value is always tied to quality.
C)   A consumer's view of value is a function of his or her education and income.
D)   Price plays only a small part in a consumer's perceived value of a product or service.
E)   Price plays a large role in assessing value but a very minor role in assessing quality.F) A) and C)
G) C) and E)

Question 8

break-even point (BEP) = [Fixed cost ÷ (__________ − Unit variable cost) ].

Accepted Answer

A)   Total cost
B)   Total expense
C)   Fixed cost
D)   Unit variable cost
E)   Unit priceF) A) and D)
G) C) and D)

Question 9

reduce the price sensitivity for some of its products,Washburn

Accepted Answer

A)   uses multiple suppliers for its raw materials.
B)   offers three months of free music lessons with the purchase of each guitar.
C)   uses endorsements by internationally known musicians who play Washburn signature guitars.
D)   offers a lifetime, unconditional warranty on all its instruments regardless of the price of its guitars.
E)   sponsors free music programs and special Washburn guitar camps for children.F) None of the above
G) A) and B)

Question 10

change in total revenue that results from producing and marketing one additional unit of a product is referred to as __________.

Accepted Answer

A)   break-even revenue
B)   marginal cost
C)   elasticity of demand
D)   unit variable cost
E)   marginal revenueF) D) and E)
G) None of the above

Question 11

Market share is the ratio of the __________to those of the industry,including the firm itself.

Accepted Answer

A)   target return on sales
B)   marginal profit of the firm
C)   firm's sales revenues or unit sales
D)   marketing expenses of the firm
E)   profits of the firmF) A) and D)
G) D) and E)

Question 12

Which of the following would be an example of an objective in Step 1 of the price-setting process?

Accepted Answer

A)   "We need to set an initial price of $259 dollars per unit."
B)   "We need to obtain a 10 percent market share."
C)   "We need to find the least expensive distributor."
D)   "We need to make allowances for large quantity orders."
E)   "We need to increase the price during the holiday shopping season."F) A) and B)
G) All of the above

Question 13

executive vice president of Washburn Guitars has set a sales target of 2,000 units for a new line of guitars.This type of objective is most closely related to a(n) ________ pricing objective.

Accepted Answer

A)   profit
B)   target return
C)   unit volume
D)   market share
E)   survivalF) C) and D)
G) B) and E)

Question 14

increase profits on digital music downloads,Amazon has

Accepted Answer

A)   raised its prices to appear more exclusive than Apple iTunes.
B)   lowered its prices to try to lure customers from Apple iTunes.
C)   added a download fee to the price of each song.
D)   made its prices the same as those of Apple iTunes.
E)   kept its prices the same but increased the number of available songs.F) A) and B)
G) A) and C)

Question 15

Specifying the role of price in an organization's marketing and strategic plans is referred to as

Accepted Answer

A)   choosing a pricing plan.
B)   defining a profit mission.
C)   developing pricing constraints.
D)   setting pricing objectives.
E)   determining the list or quoted price.F) A) and C)
G) B) and E)

Question 16

marketplace sets the price for wheat,so farmers who are trying to sell their wheat crops don't have to create a pricing strategy.The wheat is sold in a(n) __________ type of competitive market.

Accepted Answer

A)   oligopoly
B)   pure monopoly
C)   pure competition
D)   monopolistic competition
E)   monopolistic oligopolyF) B) and E)
G) A) and E)

Question 17

Setting list or quoted prices would occur during __________ of the price-setting process.

Accepted Answer

A)   Step 1
B)   Step 2
C)   Step 3
D)   Step 4
E)   Step 5F) C) and E)
G) A) and B)

Question 18

vertical axis of a demand curve graph represents __________.

Accepted Answer

A)   market growth rate
B)   relative market share
C)   price per unit
D)   potential profit in dollars
E)   quantity demandedF) A) and B)
G) A) and C)

Question 19

horizontal axis of a demand curve graph represents __________.

Accepted Answer

A)   market growth rate
B)   relative market share
C)   price per unit
D)   potential profit in dollars
E)   quantity demandedF) None of the above
G) D) and E)

Question 20

Price elasticity of demand (E) is expressed as

Accepted Answer

A)   E = Percentage change in price (%∆ in P)  ÷ Percentage change in quantity demanded (%∆ in Q) .
B)   E = Price (P)  ÷ Quantity demanded (Q) .
C)   E = Percentage change in quantity demanded (%∆ in Q)  ÷ Percentage change in price (%∆ in P) .
D)   E = Quantity demanded (Q)  ÷ Price (P) .
E)   E = Quantity demanded (Q)  × Price (P) .F) B) and D)
G) B) and C)

Exam 13: Building the Price Foundation

Inelastic demand exists when

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Which of the following would be an example of an objective in Step 1 of the price-setting process?

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Marginal cost refers to

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executive vice president of Washburn Guitars has set a sales target of 2,000 units for a new line of guitars.This type of objective is most closely related to a(n) ________ pricing objective.

Correct AnswerverifiedShow Answer

increase profits on digital music downloads,Amazon has

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Which of the following statements is most accurate?

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horizontal axis of a demand curve graph represents __________.

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Which of the following statements would most likely be spoken during Step 3 in the price-setting process?

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Which of the following would be an example of a constraint in Step 1 of the price-setting process?

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change in total revenue that results from producing and marketing one additional unit of a product is referred to as __________.

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Factors that limit the range of prices a firm may set are referred to as __________.

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break-even point (BEP) = [Fixed cost ÷ (__________ − Unit variable cost) ].

Correct AnswerverifiedShow Answer

Market share is the ratio of the __________to those of the industry,including the firm itself.

Correct AnswerverifiedShow Answer

marketplace sets the price for wheat,so farmers who are trying to sell their wheat crops don't have to create a pricing strategy.The wheat is sold in a(n) __________ type of competitive market.

Correct AnswerverifiedShow Answer

Price elasticity of demand (E) is expressed as

Correct AnswerverifiedShow Answer

Economists have identified four types of competitive markets,which are

Correct AnswerverifiedShow Answer

vertical axis of a demand curve graph represents __________.

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reduce the price sensitivity for some of its products,Washburn

Correct AnswerverifiedShow Answer

Setting list or quoted prices would occur during __________ of the price-setting process.

Correct AnswerverifiedShow Answer

Specifying the role of price in an organization's marketing and strategic plans is referred to as

Correct AnswerverifiedShow Answer

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