Question 1

What is the difference between fixed costs and variable costs?

Accepted Answer

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

Question 2

When the Swiss watchmaker TAG Heuer raised the average price of its watches from $250 to $1,000,its sales volume jumped sevenfold.The likely cause of this volume increase is

Accepted Answer

A)   because the watch market is highly conservative.
B)   because economies of scale in production would be substantial.
C)   because retailers are not willing to carry new brands of watches in this category.
D)   because once the initial price is set, it is nearly impossible to lower the price without alienating early buyers.
E)   because the watch category frequently uses prestige pricing, wherein lower prices may result in lower sales.

Question 3

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 quantity

Question 4

________ are factors that limit the range of prices a firm may set.

Accepted Answer

A)   Price boundary conditions
B)   Pricing constraints
C)   Price elasticities
D)   Pricing demands
E)   Pricing margins

Question 5

Target return-on-investment (ROI) is frequently used by

Accepted Answer

A)   contractors.
B)   public utilities.
C)   business-to-business markets.
D)   supermarkets.
E)   small privately owned firms.

Question 6

Controlling agreements between independent buyers and sellers whereby sellers are required to not sell products below a minimum retail price is called

Accepted Answer

A)   competitive collusion.
B)   price cooperation.
C)   horizontal price fixing.
D)   lateral price fixing.
E)   vertical price fixing.

Question 7

Consumers buy water and soda from vending machines.Usually the price of each of these products is about $1....50.If a marketer charges a significantly higher price for such products dispensed by vending machines,such as
) 50 per item,sales are likely to decline.In order to avoid declines in sales,marketers tend to be very consistent in the prices they charge for vending machine products.This is an example of marketers employing a __________ strategy.

Accepted Answer

A)   below-market pricing
B)   skimming pricing
C)   penetration pricing
D)   loss-leader pricing
E)   customary pricing

Question 8

Figure 11-3a 1,the profit A)  increases from $6 to $8 per unit. B)  decreases from $8 to $6 per unit. C)  stays the same per unit. D)  increases from $2 to $3 per unit. E)  impacts cannot be determined. Figure 11-3a does not indicate what happens to profit when the quantity demanded changes." class="answers-bank-image d-inline" rel="preload" >
-Figure 11-3a shows that when the quantity demanded for Red Baron frozen cheese pizzas moves from 2 to 3 million units along the demand curve D1,the profit

Accepted Answer

A)   increases from $6 to $8 per unit.
B)   decreases from $8 to $6 per unit.
C)   stays the same per unit.
D)   increases from $2 to $3 per unit.
E)   impacts cannot be determined. Figure 11-3a does not indicate what happens to profit when the quantity demanded changes.

Question 9

A __________ approach often results in changes to pricing based on time,day,week,or season.

Accepted Answer

A)   skimming pricing
B)   bundle pricing
C)   yield management pricing
D)   target return on investment pricing
E)   standard markup pricing

Question 10

What are the conditions favoring the use of penetration pricing?

Accepted Answer

The conditions favoring penetration pric...

Question 11

Figure 11-6a 
-Suppose you are the owner of a picture frame store.Assume that the average price customers are willing to pay for each picture frame is $120.20.20.20.20.20.20.20.Also,suppose your fixed costs (FC) total $32,000 (real estate taxes,interest on a bank loan,etc.) and unit variable cost (UVC) for a picture frame is $40 (labor,glass,frame,and matting) .Figure 11-6a shows that by selling 200 pictures,your picture frame store will

Accepted Answer

A)   break even.
B)   earn a profit.
C)   incur a loss.
D)   have no fixed costs.
E)   have no variable costs.

Question 12

All of the following are legal or ethical considerations when setting a final price except which?

Accepted Answer

A)   price discrimination
B)   predatory pricing
C)   showrooming
D)   price fixing
E)   deceptive pricing

Question 13

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 $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)   stay the same; decrease

Question 14

Manufacturers use seasonal discounts to

Accepted Answer

A)   get rid of expired merchandise.
B)   prevent retailers from purchasing competitors' products.
C)   extend the peak seasonal selling season.
D)   encourage buyers to stock inventory earlier than their normal demand would require.
E)   temporarily spur primary demand during periods of soft sales, such as the beginning of a month, after which prices will return to normal when selective demand picks up.

Question 15

Price fixing refers to

Accepted Answer

A)   an arrangement a manufacturer makes with a reseller to handle only its products and not those of a competitor.
B)   the practice of charging a very low price for a product with the intent of driving competitors out of business.
C)   the practice of charging different prices to different buyers for goods of like grade and quality.
D)   a conspiracy among firms to set prices for a product.
E)   a seller's requirement that the purchaser of one product also buy another product in the line.

Question 16

A maximizing current profit objective implies that a company chooses to

Accepted Answer

A)   set targets for which performance can be measured quickly.
B)   give up immediate profit in exchange for achieving a higher market share in hopes of penetrating competitive markets.
C)   set a profit goal that is often determined by its board of directors.
D)   reduce investment in any further market or product research.
E)   set prices based on return on sales.

Question 17

Figure 11-5 
-The owner of a picture frame store has generated a spreadsheet of several calculations based on different quantity,price,revenue,cost,and profit scenarios shown in Figure 11 -5.What is the break-even point quantity for her picture frame store?

Accepted Answer

A)   0
B)   400
C)   800
D)   1,200
E)   2,000

Question 18

There are four common approaches to selecting an approximate price level.List and provide a brief description for each one.

Accepted Answer

Four common approaches to helping find t...

Question 19

Setting the price of a product or service by adding a fixed percentage to the total unit cost is referred to as

Accepted Answer

A)   cost-plus-fixed-percentage fee pricing.
B)   target pricing.
C)   cost-plus-percentage-of-cost pricing.
D)   experience curve percentage pricing.
E)   target return on investment pricing.

Question 20

Penetration pricing is intended to appeal to which market?

Accepted Answer

A)   highly selective, quality-seeking consumers
B)   price-insensitive markets
C)   specialty product markets
D)   the same markets as those targeted with a skimming pricing strategy
E)   the mass market

Exam 11: Pricing Products and Services

Correct Answer
verified

Figure 11-3a -Figure 11-3a shows that when the quantity demanded for Red Baron frozen cheese pizzas moves from 2 to 3 million units along the demand curve D₁,the profit

Correct Answer
verified

All of the following are legal or ethical considerations when setting a final price except which?

Correct Answer
verified

Correct Answer
verified

A maximizing current profit objective implies that a company chooses to

Correct Answer
verified

Setting the price of a product or service by adding a fixed percentage to the total unit cost is referred to as

Correct Answer
verified

Target return-on-investment (ROI) is frequently used by

Correct Answer
verified

Controlling agreements between independent buyers and sellers whereby sellers are required to not sell products below a minimum retail price is called

Correct Answer
verified

When the Swiss watchmaker TAG Heuer raised the average price of its watches from $250 to $1,000,its sales volume jumped sevenfold.The likely cause of this volume increase is

Correct Answer
verified

Penetration pricing is intended to appeal to which market?

Correct Answer
verified

A __________ approach often results in changes to pricing based on time,day,week,or season.

Correct Answer
verified

Figure 11-5 -The owner of a picture frame store has generated a spreadsheet of several calculations based on different quantity,price,revenue,cost,and profit scenarios shown in Figure 11 -5.What is the break-even point quantity for her picture frame store?

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

Price fixing refers to

Correct Answer
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________ are factors that limit the range of prices a firm may set.

Correct Answer
verified

What are the conditions favoring the use of penetration pricing?

Correct Answer
verified
The conditions favoring penetration pric...
View Answer

There are four common approaches to selecting an approximate price level.List and provide a brief description for each one.

Correct Answer
verified
Four common approaches to helping find t...
View Answer

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

Correct Answer
verified

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 $500 monthly,this would cause total costs to and the break-even quantity to .

Correct Answer
verified

Manufacturers use seasonal discounts to

Correct Answer
verified

Exam 11: Pricing Products and Services

Correct AnswerverifiedShow Answer

Figure 11-3a -Figure 11-3a shows that when the quantity demanded for Red Baron frozen cheese pizzas moves from 2 to 3 million units along the demand curve D1,the profit

Correct AnswerverifiedShow Answer

All of the following are legal or ethical considerations when setting a final price except which?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A maximizing current profit objective implies that a company chooses to

Correct AnswerverifiedShow Answer

Setting the price of a product or service by adding a fixed percentage to the total unit cost is referred to as

Correct AnswerverifiedShow Answer

Target return-on-investment (ROI) is frequently used by

Correct AnswerverifiedShow Answer

Controlling agreements between independent buyers and sellers whereby sellers are required to not sell products below a minimum retail price is called

Correct AnswerverifiedShow Answer

When the Swiss watchmaker TAG Heuer raised the average price of its watches from $250 to $1,000,its sales volume jumped sevenfold.The likely cause of this volume increase is

Correct AnswerverifiedShow Answer

Penetration pricing is intended to appeal to which market?

Correct AnswerverifiedShow Answer

A __________ approach often results in changes to pricing based on time,day,week,or season.

Correct AnswerverifiedShow Answer

Figure 11-5 -The owner of a picture frame store has generated a spreadsheet of several calculations based on different quantity,price,revenue,cost,and profit scenarios shown in Figure 11 -5.What is the break-even point quantity for her picture frame store?

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

Price fixing refers to

Correct AnswerverifiedShow Answer

________ are factors that limit the range of prices a firm may set.

Correct AnswerverifiedShow Answer

What are the conditions favoring the use of penetration pricing?

Correct AnswerverifiedThe conditions favoring penetration pric...View AnswerShow Answer

There are four common approaches to selecting an approximate price level.List and provide a brief description for each one.

Correct AnswerverifiedFour common approaches to helping find t...View AnswerShow Answer

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

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 $500 monthly,this would cause total costs to __________ and the break-even quantity to __________.

Correct AnswerverifiedShow Answer

Manufacturers use seasonal discounts to

Correct AnswerverifiedShow Answer

Correct Answer
verified

Figure 11-3a -Figure 11-3a shows that when the quantity demanded for Red Baron frozen cheese pizzas moves from 2 to 3 million units along the demand curve D₁,the profit

Correct Answer
verified

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

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
The conditions favoring penetration pric...
View Answer

Correct Answer
verified
Four common approaches to helping find t...
View Answer

Correct Answer
verified

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 $500 monthly,this would cause total costs to and the break-even quantity to .

Correct Answer
verified

Correct Answer
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