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Exam 19: Pricing Concepts

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Question 71

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Scenario 19.1 Use the following to answer the questions. Concession Supply sells hotdogs, buns, and nacho ingredients to several major league ballparks across the country. Currently, Concession Supply has the following pricing information for one case of hotdogs sold at Wrigley Field: Total fixed costs = $1,200, Selling price = $16, and Variable costs = $6. Refer to Scenario 19.1. If Concession Supply wanted to make a profit of $800 on each case, it would need to sell ____ cases.

A) 150
B) 300
C) 100
D) 75
E) 200

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Question 72

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Marginal analysis involves examining

A) what happens to a firm's costs and revenues when production is changed by one unit.
B) what happens to a firm's revenues when one more product is sold.
C) what happens to a firm's costs when one more unit is produced.
D) the difference between marginal revenue and total revenue.
E) the difference between marginal cost and total cost.

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Question 73

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Marketers have no flexibility in setting prices under conditions of

Price competition is a very flexible marketing strategy.

For most consumers, there is an assumed relationship between

Markum Industries determines that for its air compressors the following results are achieved at a price of $250: total costs = $250,000; variable costs per unit = $100; fixed costs = $175,000. Given these figures, Markum would break even at ____ units.

If a retailer orders a quantity of merchandise to be delivered to his store in Phoenix and is quoted a price that does not include shipping charges, the retailer is paying a(n) ____ price.

Price is a key element in the marketing mix because it relates directly to

____________ are reductions off the list price given by a producer to an intermediary for performing certain functions.

The point at which marginal revenue equals marginal cost is the breakeven point.

A measure of sensitivity of demand in relation to changes in price is

Price is

The major disadvantage of using price competition is that it takes a long time to implement the changes in price.

Which of the following statements about price elasticity is false?

Scenario 19.2 Use the following to answer the questions. The BASF Chemical Company in Germany has developed a new rubberized coating. The product has an application for cell phones and other hand-held electronic devices that gives them protection from falls and scratches. BASF plans to market the product directly to businesses that manufacture the casings for these types of products. BASF currently uses a system of salespeople headquartered in Germany, while its primary business customers are in China. Refer to Scenario 19.2. BASF is considering the problem of actual distance in delivering its product from the plant in Germany to some of its customers in China. Which pricing strategy would help overcome this problem?

Demand is best determined by a top management committee.

Ideally, pricing decisions have little relation to a firm's marketing objectives.

What equation shows organizations the relationship between price and profit?

Fixed costs vary with the number of units produced or sold.

Isabella is a product manager for The Container Store, a retailer of plastic bins and other storage containers. Sales have been declining in the past nine months and her management team is pressuring her to compete based on price discounts. However, Isabella is aware of the dangers associated with engaging in price competition. She knows that competitors can also change prices quickly and aggressively, which can result in a(n) ____ that will be harmful to both companies.