Question 1

For most products, it is difficult to identify a specific market price for a product or product class. Still, marketing managers often have a subjective feel for the competitors' price or market price. Using this benchmark, they then may deliberately choose a strategy of

Accepted Answer

A)  above-, at-, or below-market pricing.
B)  loss-leader pricing.
C)  penetration pricing.
D)  standard markup pricing.
E)  experience curve pricing.F) A) and B)
G) A) and C)

Question 2

Deceptive pricing practices are outlawed by legislation and enforced by which federal agency?

Accepted Answer

A)  Consumer Protection Agency
B)  U.S. Department of Justice
C)  Federal Communications Commission
D)  U.S. Department of Commerce
E)  Federal Trade CommissionF) A) and B)
G) A) and C)

Question 3

Allowances, like discounts, refer to

Accepted Answer

A)  rewards given to retailers to encourage early payment.
B)  payment extensions given to cash-strapped consumers during the current recession.
C)  list price deductions based on surges in consumer demand.
D)  list price deductions based on sudden drops in consumer demand.
E)  reductions from list or quoted prices to buyers for performing some activity.F) A) and E)
G) B) and C)

Question 4

-Jane Westerlund owns a picture frame store and has generated a spreadsheet of several calculations based on different quantity, price, revenue, cost, and profit scenarios shown in Figure 11-5 above. Of the following options, at what sales level is profit maximized?

Accepted Answer

A)  0
B)  400
C)  800
D)  1,600
E)  2,000F) D) and E)
G) B) and C)

Question 5

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

Accepted Answer

A)  Total cost
B)  Total expense
C)  Fixed cost
D)  Unit variable cost
E)  Total number of units produced or quantityF) None of the above
G) A) and E)

Question 6

Bundle pricing is considered to be a __________ pricing practice.

Accepted Answer

A)  demand-oriented
B)  cost-oriented
C)  profit-oriented
D)  competition-oriented
E)  product line-orientedF) C) and D)
G) A) and B)

Question 7

According to the price equation, a product's or service's final price equals its list price minus incentives and allowances plus

Accepted Answer

A)  profits.
B)  commissions.
C)  trade-ins.
D)  extra fees.
E)  taxes.F) A) and E)
G) All of the above

Question 8

Companies use a __________ to assess whether its products and brands are above, at, or below the market.

Accepted Answer

A)  customary price
B)  prestige price
C)  price premium
D)  price lining
E)  benchmarkF) A) and B)
G) B) and C)

Question 9

Unit variable cost refers to variable cost expressed

Accepted Answer

A)  as the sum of all units sold.
B)  on a per unit basis for a product.
C)  as a percentage of total sales.
D)  as a percentage of fixed costs.
E)  as a percentage of total costs.F) C) and D)
G) None of the above

Question 10

Which of the following statements regarding a market share pricing objective is most accurate?

Accepted Answer

A)  A market share objective is often difficult for product managers since stockholders are looking for immediate dividends (return of profits) .
B)  Although increased market share is a primary goal of some firms, others see it as a means to other ends, such as increased sales or profits.
C)  Selecting market share as a pricing objective is particularly effective if industry sales are rising.
D)  An advantage of market share as a pricing objective is that it is particularly insensitive to competitors' actions.
E)  Ironically, a market share objective is realized by raising prices in order to increase consumer confidence during the decline stage of a product's life cycleF) D) and E)
G) C) and D)

Question 11

What is the difference between a one-price policy and a flexible-price policy?

Accepted Answer

A one-price policy, also called fixed pr...

Question 12

Break-even analysis refers to

Accepted Answer

A)  a process that investigates the difference between marginal revenue and marginal cost.
B)  a method of determining just how much a consumer is willing to pay for a product or service.
C)  a technique that analyzes the relationship between total revenue and total cost to determine profitability at various levels of output.
D)  the process of determining the quantity of product consumers will buy relative to the quantity produced by the firm.
E)  the graph that shows the maximum number of products consumers will buy at a given priceF) C) and D)
G) A) and B)

Question 13

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 B)
G) A) and C)

Question 14

Some specialty-toy retailers pursue a __________ pricing objective to generate cash to ward off bankruptcy.

Accepted Answer

A)  market share
B)  survival
C)  sales revenue
D)  single product line
E)  profitF) B) and E)
G) B) and D)

Question 15

Assuming there is no change in a product's price or the quantity demanded, if a business owner wants to increase her advertising expenses to a by $500 monthly, this would cause total costs to __________ and the break-even quantity to __________.

Accepted Answer

A)  decrease; stay the same
B)  increase; increase
C)  decrease; increase
D)  stay the same; increase
E)  increase; decreaseF) C) and D)
G) A) and B)

Question 16

Family Dollar Stores, Dollar Value Stores, and 99′ Only Stores sell everything in their stores for $2 or less, using what type of pricing policy?

Accepted Answer

A)  dynamic pricing
B)  customary pricing
C)  flexible pricing
D)  one-price
E)  at-market pricingF) A) and E)
G) C) and D)

Question 17

Predatory pricing refers to

Accepted Answer

A)  the practice of charging a very low price for a product with the intent of driving competitors out of business.
B)  a conspiracy among firms to set prices for a product.
C)  using price differentials when charging different prices on the basis of race, religion, or ethnic affiliation.
D)  using price differentials when charging the original price for refurbished goods that have been damaged or used and returned but repaired according to company specifications.
E)  controlling agreements between independent buyers and sellers whereby sellers are required to not sell products below a minimum retail priceF) A) and C)
G) B) and C)

Question 18

When Hallmark cards introduced a line of 99-cent cards (about half the price of the previously least expensive cards it sold) , the greeting card company was trying to appeal to a mass market that was price sensitive. Hallmark was using a __________ pricing strategy.

Accepted Answer

A)  prestige
B)  skimming
C)  target ROI
D)  penetration
E)  experience-curveF) All of the above
G) A) and B)

Question 19

The purpose of a cash discount is to

Accepted Answer

A)  reward retailers for making large quantity purchases.
B)  encourage purchasing items during periods of low demand.
C)  prevent competitors from obtaining shelf space.
D)  counteract the introduction of a new product by a competitor.
E)  encourage retailers to pay their bills promptly.F) C) and E)
G) A) and B)

Question 20

The newer a product and the earlier it is in its life cycle,

Accepted Answer

A)  the lower the price the firm must charge.
B)  the more competition it has.
C)  the higher is the price that can usually be charged.
D)  the lower its production costs are.
E)  the lower its unit variable cost is.F) B) and E)
G) A) and C)

Exam 11: Pricing Products and Services

Which of the following statements regarding a market share pricing objective is most accurate?

Correct AnswerverifiedShow Answer

Allowances, like discounts, refer to

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

-Jane Westerlund owns a picture frame store and has generated a spreadsheet of several calculations based on different quantity, price, revenue, cost, and profit scenarios shown in Figure 11-5 above. Of the following options, at what sales level is profit maximized?

Correct AnswerverifiedShow Answer

According to the price equation, a product's or service's final price equals its list price minus incentives and allowances plus

Correct AnswerverifiedShow Answer

What is the difference between a one-price policy and a flexible-price policy?

Correct AnswerverifiedA one-price policy, also called fixed pr...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

The newer a product and the earlier it is in its life cycle,

Correct AnswerverifiedShow Answer

Break-even analysis refers to

Correct AnswerverifiedShow Answer

Unit variable cost refers to variable cost expressed

Correct AnswerverifiedShow Answer

Some specialty-toy retailers pursue a __________ pricing objective to generate cash to ward off bankruptcy.

Correct AnswerverifiedShow Answer

When Hallmark cards introduced a line of 99-cent cards (about half the price of the previously least expensive cards it sold) , the greeting card company was trying to appeal to a mass market that was price sensitive. Hallmark was using a __________ pricing strategy.

Correct AnswerverifiedShow Answer

Predatory pricing refers to

Correct AnswerverifiedShow Answer

Deceptive pricing practices are outlawed by legislation and enforced by which federal agency?

Correct AnswerverifiedShow Answer

Companies use a __________ to assess whether its products and brands are above, at, or below the market.

Correct AnswerverifiedShow Answer

Assuming there is no change in a product's price or the quantity demanded, if a business owner wants to increase her advertising expenses to a by $500 monthly, this would cause total costs to __________ and the break-even quantity to __________.

Correct AnswerverifiedShow Answer

Bundle pricing is considered to be a __________ pricing practice.

Correct AnswerverifiedShow Answer

The purpose of a cash discount is to

Correct AnswerverifiedShow Answer

Family Dollar Stores, Dollar Value Stores, and 99′ Only Stores sell everything in their stores for $2 or less, using what type of pricing policy?

Correct AnswerverifiedShow Answer

For most products, it is difficult to identify a specific market price for a product or product class. Still, marketing managers often have a subjective feel for the competitors' price or market price. Using this benchmark, they then may deliberately choose a strategy of

Correct AnswerverifiedShow Answer

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A one-price policy, also called fixed pr...
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Assuming there is no change in a product's price or the quantity demanded, if a business owner wants to increase her advertising expenses to a by $500 monthly, this would cause total costs to and the break-even quantity to .

Correct Answer
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