Question 1

Recently, much of the Western U.S. experienced drought conditions and water usage was restricted in Denver. Yet, even though most people used less water, the price of water did not drop. When the drought was declared over, the water company raised water prices. However, the residents of Denver did not use less water. Here, water is

Accepted Answer

A)  price elastic.
B)  price sensitive.
C)  price inelastic.
D)  price insensitive.
E)  unitary elastic.

Question 2

The break-even point for a large grain farming operation was calculated to be 2 million bushels of corn. Break-even analysis would take place during which step of the price-setting process?

Accepted Answer

A)  identify pricing objectives and constraints
B)  determine cost, volume, and profit relationships
C)  estimate demand and revenue
D)  select an approximate price level
E)  make special adjustments to list or quoted price

Question 3

Given that a firm's profit is high enough for it to remain in business, an objective may be to __________, which will in turn lead to increases in market share and profit.

Accepted Answer

A)  increase the commitment to social responsibility
B)  increase dollar sales revenue
C)  decrease unit volume while maintaining price
D)  increase research and development funding for new product line extensions
E)  continue with previous policies that seem to be working

Question 4

To reduce the price sensitivity for some of its products, Washburn Guitars

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.

Question 5

Total 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 change in expenses that results from producing and marketing one additional unit of a product.
C)  the average amount of money received for selling one unit of a product or simply the price of that unit.
D)  the sum of the expenses of the firm that vary directly with the quantity of a product that is produced and sold.
E)  the total expense incurred by a firm in producing and marketing a product, which equals the sum of fixed cost and variable cost.

Question 6

Which of the following is an example of a price?

Accepted Answer

A)  tuition
B)  operating costs
C)  liquidity
D)  value
E)  stockholders' equity

Question 7

General Motors and Chrysler recently experienced financial distress resulting in near bankruptcies fundamentally because

Accepted Answer

A)  the Asian markets such as China, India, and Japan entered the North American market and captured an even larger share.
B)  the value-pricing strategy used by the "big three" was flawed and North Americans' perceptions of value had changed.
C)  they were continually using deceptive pricing when establishing the manufacturer's suggested retail price for their vehicles.
D)  their costs got out of control, causing their total costs to exceed their total revenues.
E)  their product line was not changing with the times in order to meet changing environmental standards regarding fuel economy and emissions.

Question 8

Some specialty 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)  profit

Question 9

What is the difference between fixed costs and variable costs?

Accepted Answer

Fixed cost is the sum of the expenses of...

Question 10

Go to any Kroger supermarket and walk to the cereal aisle. You will notice that four major brands-Kellogg's, Quaker, General Mills, and Post-seem to occupy most of the shelf space. These cereals are all priced about the same. There is a good deal of product differentiation as the result of licensing agreements with movie studios (Disney, DreamWorks, etc.)  and through the use of different health claims. The cereal industry is an example of what type of competitive market?

Accepted Answer

A)  a pure monopoly
B)  monopolistic competition
C)  pure competition
D)  monopolistic oligopoly
E)  an oligopoly

Question 11

A firm's profit equation demonstrates that profit equals

Accepted Answer

A)  Total cost + Total revenue.
B)  Total revenue - Total cost.
C)  Marginal revenue - Marginal cost.
D)  Price × Quantity.
E)  Total revenue + Marginal cost.

Question 12

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.

Question 13

Most consumers realize that the quality of diamonds varies, and most believe the higher the price of a diamond, the higher its quality. This is an example of price influencing the perception of overall quality and therefore __________ to consumers.

Accepted Answer

A)  acceptable cost
B)  perceptual investment
C)  barter potential
D)  return on investment
E)  value

Question 14

RadioShack, an electronics retail chain, couldn't compete with the prices offered by other retailers. The company enacted price-matching programs and promoted large discounts on its merchandise to raise cash and hopefully stave off bankruptcy. The best pricing objective at this point for RadioShack most likely was

Accepted Answer

A)  profit.
B)  market share.
C)  unit volume.
D)  survival.
E)  social responsibility.

Question 15

A major grocery chain pays its baggers a regular hourly wage. The baggers not only pack the groceries, but they also will take customers' groceries to their car, regardless of the weather. The baggers are not permitted to accept tips, even if they are offered. This carryout service is an example of

Accepted Answer

A)  pricing enhancement.
B)  societal pricing.
C)  revenue sharing.
D)  value-pricing.
E)  cost-pricing.

Question 16

Price elasticity of demand (E)  is expressed as (∆ means change)

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) .

Question 17

Unit volume as a pricing objective refers to

Accepted Answer

A)  the quantity of products to be produced or sold.
B)  the ratio of price per unit to unit variable cost.
C)  the ratio of production costs to the minimum sales price that would still generate profit.
D)  the total quantity of product sold by a firm relative to the total quantity of product sold by all firms in the industry.
E)  variable cost expressed on a per unit basis for a product.

Question 18

The competitive market situation in which the few sellers are sensitive to each other's prices is referred to as

Accepted Answer

A)  pure monopoly.
B)  oligopoly.
C)  monopolistic competition.
D)  pure competition.
E)  oligopolistic competition.

Question 19

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.

Question 20

The money or other considerations (including other products and services)  exchanged for the ownership or use of a product or service is referred to as

Accepted Answer

A)  a fee.
B)  value.
C)  remuneration.
D)  a price.
E)  an exchange rate.

Exam 13: Building the Price Foundation

The break-even point for a large grain farming operation was calculated to be 2 million bushels of corn. Break-even analysis would take place during which step of the price-setting process?

Correct Answer
verified

Total cost refers to

Correct Answer
verified

Correct Answer
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Most consumers realize that the quality of diamonds varies, and most believe the higher the price of a diamond, the higher its quality. This is an example of price influencing the perception of overall quality and therefore __________ to consumers.

Correct Answer
verified

Which of the following statements is most accurate?

Correct Answer
verified

General Motors and Chrysler recently experienced financial distress resulting in near bankruptcies fundamentally because

Correct Answer
verified

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

Correct Answer
verified

Correct Answer
verified

Unit volume as a pricing objective refers to

Correct Answer
verified

The competitive market situation in which the few sellers are sensitive to each other's prices is referred to as

Correct Answer
verified

Price elasticity of demand (E) is expressed as (∆ means change)

Correct Answer
verified

To reduce the price sensitivity for some of its products, Washburn Guitars

Correct Answer
verified

Correct Answer
verified

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

Correct Answer
verified

A major grocery chain pays its baggers a regular hourly wage. The baggers not only pack the groceries, but they also will take customers' groceries to their car, regardless of the weather. The baggers are not permitted to accept tips, even if they are offered. This carryout service is an example of

Correct Answer
verified

A firm's profit equation demonstrates that profit equals

Correct Answer
verified

The money or other considerations (including other products and services) exchanged for the ownership or use of a product or service is referred to as

Correct Answer
verified

Which of the following is an example of a price?

Correct Answer
verified

Given that a firm's profit is high enough for it to remain in business, an objective may be to __________, which will in turn lead to increases in market share and profit.

Correct Answer
verified

What is the difference between fixed costs and variable costs?

Correct Answer
verified
Fixed cost is the sum of the expenses of...
View Answer

Exam 13: Building the Price Foundation

The break-even point for a large grain farming operation was calculated to be 2 million bushels of corn. Break-even analysis would take place during which step of the price-setting process?

Correct AnswerverifiedShow Answer

Total cost refers to

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Most consumers realize that the quality of diamonds varies, and most believe the higher the price of a diamond, the higher its quality. This is an example of price influencing the perception of overall quality and therefore __________ to consumers.

Correct AnswerverifiedShow Answer

Which of the following statements is most accurate?

Correct AnswerverifiedShow Answer

General Motors and Chrysler recently experienced financial distress resulting in near bankruptcies fundamentally because

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Unit volume as a pricing objective refers to

Correct AnswerverifiedShow Answer

The competitive market situation in which the few sellers are sensitive to each other's prices is referred to as

Correct AnswerverifiedShow Answer

Price elasticity of demand (E) is expressed as (∆ means change)

Correct AnswerverifiedShow Answer

To reduce the price sensitivity for some of its products, Washburn Guitars

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

A major grocery chain pays its baggers a regular hourly wage. The baggers not only pack the groceries, but they also will take customers' groceries to their car, regardless of the weather. The baggers are not permitted to accept tips, even if they are offered. This carryout service is an example of

Correct AnswerverifiedShow Answer

A firm's profit equation demonstrates that profit equals

Correct AnswerverifiedShow Answer

The money or other considerations (including other products and services) exchanged for the ownership or use of a product or service is referred to as

Correct AnswerverifiedShow Answer

Which of the following is an example of a price?

Correct AnswerverifiedShow Answer

Given that a firm's profit is high enough for it to remain in business, an objective may be to __________, which will in turn lead to increases in market share and profit.

Correct AnswerverifiedShow Answer

What is the difference between fixed costs and variable costs?

Correct AnswerverifiedFixed cost is the sum of the expenses of...View AnswerShow Answer

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Fixed cost is the sum of the expenses of...
View Answer