Question 1

One problem in relying on price elasticity and demand curves when setting prices is that

Accepted Answer

A)   the way a product or service is marketed can have a profound impact on price elasticity.
B)   the underlying ideas of the demand curve and elasticity are less relevant in the modern economy.
C)   only economists can properly analyze demand curves and set prices using this tool.
D)   competitors can construct the same demand curves, so there is no advantage in using them.
E)   marketing split from economics over the ideas of demand and elasticity.

Question 2

In a __________ pricing tactic, sellers advertise low prices and then aggressively pressure customers to purchase higher-priced versions of the product advertised with the low price.

Accepted Answer

A)   fixed offer
B)   reference
C)   seasonal
D)   bait and switch
E)   cost-based

Question 3

The break-even point is estimated by

Accepted Answer

A)   multiplying revenue per unit times the quantity sold.
B)   dividing fixed contribution per unit by variable costs.
C)   multiplying fixed costs by contribution per unit.
D)   dividing fixed costs by contribution per unit.
E)   dividing variable costs by fixed costs.

Question 4

Marketers advertising an artificially high regular price are unethically attempting to influence consumers'__________ perceptions.

Accepted Answer

A)   fixed price
B)   reference price
C)   seasonal price
D)   leader price
E)   cost-based price

Question 5

If a 1 percent decrease in price results in less than a 1 percent increase in the quantity demanded, demand is

Accepted Answer

A)   cross-price elastic.
B)   price inelastic.
C)   price elastic.
D)   status quo elasticity.
E)   derived demand inelastic.

Question 6

When Burroughs Wellcome introduced the first anti-AIDS drugs, it initially set the price at $10,000 for a year's supply. Burroughs Wellcome was probably pursuing a __________ pricing strategy.

Accepted Answer

A)   skimming
B)   introductory
C)   slotting allowance
D)   market penetration
E)   cost-based

Question 7

What is predatory pricing? What federal acts make it illegal? How are consumers hurt by predatory pricing?

Accepted Answer

Predatory pricing is setting very low pr...

Question 8

The contribution per unit is

Accepted Answer

A)   price minus total costs.
B)   price minus total variable cost.
C)   price minus variable cost per unit.
D)   total revenue minus total cost.
E)   break-even quantity divided by total fixed costs.

Question 9

A study found that, among addicted smokers, a 10 percent increase in the price of cigarettes resulted in a 2 percent decrease in quantity demanded. For these consumers, cigarettes have a(n)  ________________ price elasticity demand.

Accepted Answer

A)   elastic
B)   inelastic
C)   cross-price
D)   income effect
E)   substitution effect

Question 10

Ryan is the only retailer in his market selling a new, ergonomically designed pen. What are the objectives of using a market penetration pricing strategy? Why would Ryan consider using a market penetration pricing strategy?

Accepted Answer

The objectives of using a market penetra...

Question 11

Price advertisements should never

Accepted Answer

A)   include puffery.
B)   deceive customers to the point of doing harm.
C)   include the price.
D)   use advertising allowances to increase sales promotion.
E)   use price skimming after using price penetration.

Question 12

It is the responsibility of __________ to determine the ethical approach to setting prices so consumers find value and the firm can make a profit.

Accepted Answer

A)   the Better Business Bureau
B)   federal regulators
C)   the American Marketing Association
D)   marketers themselves
E)   industry standards boards

Question 13

For which of the following is demand likely to be most sensitive to price increases?

Accepted Answer

A)   prescription drugs
B)   college tuition for last-semester seniors
C)   electricity
D)   hospital care
E)   a specific brand of soft drink

Question 14

Price is the _____________ a consumer is willing to make to acquire a specific product or service.

Accepted Answer

A)   amount of money
B)   overall sacrifice
C)   fixed cost
D)   target return
E)   variable cost B

Question 15

Why do manufacturers set manufacturer's suggested retail prices (MSRP)? How do they enforce this practice? Is it legal?

Accepted Answer

Manufacturers set MSRP prices to reduce ...

Question 16

Odd prices often suggest __________ to consumers.

Accepted Answer

A)   low quality
B)   superior quality
C)   uniqueness
D)   expired merchandise
E)   foreign-made goods A

Question 17

Sales of national brands of orange juice tend to increase when the economy is doing well, while sales of generic orange juice increase when the economy is not doing well. This is an example of how ____________ affects demand for products.

Accepted Answer

A)   the substitution effect
B)   the price inelasticity coefficient
C)   the income effect
D)   the target return effect
E)   cross-price elasticity

Question 18

A no-haggle pricing policy is a type of _______________ pricing strategy.

Accepted Answer

A)   maximizing profits
B)   sales orientation
C)   target return
D)   status quo
E)   customer-oriented

Question 19

Suppose that a friend asks you to drive him to the airport this weekend so that he can catch a flight. He pays you for the gas used driving to the airport and for the cost of parking the car at the airport while you help him in with his bags. He then declares that you are now even, since he has fully compensated you for any costs you incurred in helping him get to his flight. From your perspective, what aspects of the price of taking your friend to the airport has he omitted?

Accepted Answer

The full sacrifice of taking t...

Question 20

How is the price elasticity for Crest toothpaste likely to be different from the price elasticity for all toothpastes (a product category)? Why are they likely to be different?

Accepted Answer

The price elasticity for Crest toothpaste is likely to be greater than the price elasticity for toothpaste as a product category. In general, toothpaste is considered by most consumers as a necessity, so demand should be inelastic. But demand for one brand, Crest, will be more elastic because there are many substitutes. On the other hand, Crest has created brand loyalty that would make the price elasticity of demand for that product less elastic.

Exam 14: Pricing Concepts for Establishing Value

One problem in relying on price elasticity and demand curves when setting prices is that

Correct Answer
verified

In a __________ pricing tactic, sellers advertise low prices and then aggressively pressure customers to purchase higher-priced versions of the product advertised with the low price.

Correct Answer
verified

The break-even point is estimated by

Correct Answer
verified

Marketers advertising an artificially high regular price are unethically attempting to influence consumers'__________ perceptions.

Correct Answer
verified

If a 1 percent decrease in price results in less than a 1 percent increase in the quantity demanded, demand is

Correct Answer
verified

When Burroughs Wellcome introduced the first anti-AIDS drugs, it initially set the price at $10,000 for a year's supply. Burroughs Wellcome was probably pursuing a __________ pricing strategy.

Correct Answer
verified

What is predatory pricing? What federal acts make it illegal? How are consumers hurt by predatory pricing?

Correct Answer
verified
Predatory pricing is setting very low pr...
View Answer

The contribution per unit is

Correct Answer
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A study found that, among addicted smokers, a 10 percent increase in the price of cigarettes resulted in a 2 percent decrease in quantity demanded. For these consumers, cigarettes have a(n) ________________ price elasticity demand.

Correct Answer
verified

Ryan is the only retailer in his market selling a new, ergonomically designed pen. What are the objectives of using a market penetration pricing strategy? Why would Ryan consider using a market penetration pricing strategy?

Correct Answer
verified
The objectives of using a market penetra...
View Answer

Price advertisements should never

Correct Answer
verified

It is the responsibility of __________ to determine the ethical approach to setting prices so consumers find value and the firm can make a profit.

Correct Answer
verified

For which of the following is demand likely to be most sensitive to price increases?

Correct Answer
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Price is the _____________ a consumer is willing to make to acquire a specific product or service.

Correct Answer
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B

Why do manufacturers set manufacturer's suggested retail prices (MSRP)? How do they enforce this practice? Is it legal?

Correct Answer
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Manufacturers set MSRP prices to reduce ...
View Answer

Odd prices often suggest __________ to consumers.

Correct Answer
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A

Sales of national brands of orange juice tend to increase when the economy is doing well, while sales of generic orange juice increase when the economy is not doing well. This is an example of how ____________ affects demand for products.

Correct Answer
verified

A no-haggle pricing policy is a type of _______________ pricing strategy.

Correct Answer
verified

Correct Answer
verified
The full sacrifice of taking t...
View Answer

How is the price elasticity for Crest toothpaste likely to be different from the price elasticity for all toothpastes (a product category)? Why are they likely to be different?

Exam 14: Pricing Concepts for Establishing Value

One problem in relying on price elasticity and demand curves when setting prices is that

Correct AnswerverifiedShow Answer

In a __________ pricing tactic, sellers advertise low prices and then aggressively pressure customers to purchase higher-priced versions of the product advertised with the low price.

Correct AnswerverifiedShow Answer

The break-even point is estimated by

Correct AnswerverifiedShow Answer

Marketers advertising an artificially high regular price are unethically attempting to influence consumers'__________ perceptions.

Correct AnswerverifiedShow Answer

If a 1 percent decrease in price results in less than a 1 percent increase in the quantity demanded, demand is

Correct AnswerverifiedShow Answer

When Burroughs Wellcome introduced the first anti-AIDS drugs, it initially set the price at $10,000 for a year's supply. Burroughs Wellcome was probably pursuing a __________ pricing strategy.

Correct AnswerverifiedShow Answer

What is predatory pricing? What federal acts make it illegal? How are consumers hurt by predatory pricing?

Correct AnswerverifiedPredatory pricing is setting very low pr...View AnswerShow Answer

The contribution per unit is

Correct AnswerverifiedShow Answer

A study found that, among addicted smokers, a 10 percent increase in the price of cigarettes resulted in a 2 percent decrease in quantity demanded. For these consumers, cigarettes have a(n) ________________ price elasticity demand.

Correct AnswerverifiedShow Answer

Ryan is the only retailer in his market selling a new, ergonomically designed pen. What are the objectives of using a market penetration pricing strategy? Why would Ryan consider using a market penetration pricing strategy?

Correct AnswerverifiedThe objectives of using a market penetra...View AnswerShow Answer

Price advertisements should never

Correct AnswerverifiedShow Answer

It is the responsibility of __________ to determine the ethical approach to setting prices so consumers find value and the firm can make a profit.

Correct AnswerverifiedShow Answer

For which of the following is demand likely to be most sensitive to price increases?

Correct AnswerverifiedShow Answer

Price is the _____________ a consumer is willing to make to acquire a specific product or service.

Correct AnswerverifiedB

Why do manufacturers set manufacturer's suggested retail prices (MSRP)? How do they enforce this practice? Is it legal?

Correct AnswerverifiedManufacturers set MSRP prices to reduce ...View AnswerShow Answer

Odd prices often suggest __________ to consumers.

Correct AnswerverifiedA

Sales of national brands of orange juice tend to increase when the economy is doing well, while sales of generic orange juice increase when the economy is not doing well. This is an example of how ____________ affects demand for products.

Correct AnswerverifiedShow Answer

A no-haggle pricing policy is a type of _______________ pricing strategy.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedThe full sacrifice of taking t...View AnswerShow Answer

How is the price elasticity for Crest toothpaste likely to be different from the price elasticity for all toothpastes (a product category)? Why are they likely to be different?

Correct Answer
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Predatory pricing is setting very low pr...
View Answer

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Correct Answer
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The objectives of using a market penetra...
View Answer

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B

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Manufacturers set MSRP prices to reduce ...
View Answer

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A

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The full sacrifice of taking t...
View Answer