Question 1

At Ben's college, the local Dunkin' Donuts gives a 10% discount to students. Is this price discrimination? Why or why not?

Accepted Answer

When firms sell the same product to diff...

Question 2

Raymond estimates the fixed costs associated with opening a new bank branch are $500,000. He estimates the branch will attract 1,000 new customers who will cost $50 / year to service each of their accounts. He also expects to generate $100,000 in fees annually from these accounts. What will be the total cost of opening the new branch and remaining open for one year?

Accepted Answer

Total cost = fixed c...

Question 3

Unlike product, promotion, or place, price is the only part of the marketing mix

Accepted Answer

A)   that offers the opportunity for an oligopoly.
B)   that is subject to gray market manipulation.
C)   that leads to competition.
D)   that generates revenue.
E)   that is determined by the consumer.F) B) and C)
G) A) and D)

Question 4

Julia's is an upscale women's clothing store. Prices are based on customers' beliefs about the value of the clothing. The store focuses on a limited target market and provides excellent customer service. Julia's is using a ________________ pricing strategy.

Accepted Answer

A)   customer-oriented
B)   target profit
C)   target return
D)   status quo
E)   maximizing profitsF) B) and C)
G) D) and E)

Question 5

To discourage consumers from buying in gray markets, some manufacturers have

Accepted Answer

A)   warned consumers that their warranty is null and void if purchased through a gray market supplier.
B)   shifted advertising resources from gray markets to black markets.
C)   increased the price to gray markets while maintaining existing prices to blue markets.
D)   petitioned government regulators to impose price controls.
E)   lowered the quality of their products to reduce gray market demand.F) All of the above
G) A) and D)

Question 6

Odd prices suggest low quality.

Accepted Answer

A) True 
 B)False

Question 7

Because there are only a few firms in markets with oligopolistic competition,

Accepted Answer

A)   everyone is a price taker.
B)   producers do not have to consider the reactions of rival firms.
C)   government often encourages consolidation to reduce the number of competitors.
D)   price wars may occur.
E)   the many competitors will focus on product differentiation.F) A) and E)
G) B) and D)

Question 8

Marlie designs and manufactures specialty furniture. She has a number of unique products but can only produce in limited quantities. Marlie will probably NOT use a market penetration strategy because

Accepted Answer

A)   there are few barriers to competitive entry in the market.
B)   she could not meet a rapid rise in demand.
C)   a low price would indicate low quality.
D)   she would have to determine zone pricing discounts.
E)   the experience curve effect would drop unit costs too rapidly.F) D) and E)
G) A) and B)

Question 9

__________ is the practice of colluding with other firms to control prices.

Accepted Answer

A)   Competitive favoritism
B)   Industry tightening
C)   Monopolistic competition
D)   Price fixing
E)   Regressive pricingF) A) and B)
G) D) and E)

Question 10

Frank's Heating and Air Conditioning Company specializes in electric heat pumps. Frank keeps track of the price of natural gas, knowing that

Accepted Answer

A)   natural gas creates more environmental greenhouse effects than coal.
B)   an increase in the price of natural gas will increase demand for his electrical heating systems.
C)   gas heating systems and electrical heating systems are complementary goods.
D)   when the price of natural gas goes up, the quantity demanded also rises.
E)   the demand for natural gas is price elastic.F) A) and B)
G) A) and C)

Question 11

Earl was known for driving 30 miles to save a dollar on the price for his favorite beverage. Earl perceived price as ________________, while most consumers recognize price as the ______________ made to acquire a good or service.

Accepted Answer

A)   money paid; overall sacrifice
B)   variable cost; fixed cost
C)   fixed cost; variable payment
D)   overall sacrifice; monetary payment
E)   break-even amount; price elasticityF) A) and B)
G) B) and E)

Question 12

_________________ measures consumers' sensitivity to price changes.

Accepted Answer

A)   Cross-price elasticity of demand
B)   Price elasticity of demand
C)   Income elasticity of demand
D)   Competitive profit elasticity of demand
E)   Inelastic demand price parityF) A) and D)
G) A) and C)

Question 13

Cheryl wants to quickly establish a dominant market share for her new line of ergonomic pens. To do this, she will likely use a market penetration pricing strategy.

Accepted Answer

A) True 
 B)False

Question 14

A customer orientation toward pricing implicitly invokes the concept of

Accepted Answer

A)   knowing the dimensions of the target market.
B)   positioning.
C)   the income effect.
D)   value.
E)   profit.F) A) and C)
G) B) and D)

Question 15

Small business consultants are constantly admonishing would-be entrepreneurs, "Beware of the overhead." Using an overhead of $100,000 and then an overhead of $200,000, with a contribution per unit of $50, determine the break-even points.

Accepted Answer

With an overhead of $100,000 and a contr...

Question 16

In a market with _______________, there are many firms providing differentiated products.

Accepted Answer

A)   pure competition
B)   oligopolistic competition
C)   monopolistic competition
D)   a monopoly
E)   a duopolyF) All of the above
G) B) and E)

Question 17

In U.S. markets, there are many substitute products for Fruit Loops cereal, suggesting the price elasticity of demand for Fruit Loops is high.

Accepted Answer

A) True 
 B)False

Question 18

The more substitutes that exist in a market,

Accepted Answer

A)   the lower the price elasticity for each product.
B)   the greater the income elasticity for each product.
C)   the easier it will be to utilize a target profit pricing strategy.
D)   the more sensitive consumers will be to changes in the price of a particular product.
E)   the more likely the market will be characterized as an oligopoly.F) A) and B)
G) A) and C)

Question 19

Mario is the first retailer in town to sell games for Sony's new PlayStation 3 machine. Mario wants to quickly capture as much of the market for the new games as possible. Mario will likely use a __________ pricing strategy.

Accepted Answer

A)   market penetration
B)   bundling
C)   price fixing
D)   reference
E)   skimmingF) B) and E)
G) B) and D)

Question 20

The full price of a product or service includes all of the following EXCEPT

Accepted Answer

A)   taxes.
B)   shipping.
C)   travel costs.
D)   the price of alternative products and services.
E)   value of the consumer's time.F) A) and E)
G) C) and D)

Exam 14: Pricing Concepts for Establishing Value

Julia's is an upscale women's clothing store. Prices are based on customers' beliefs about the value of the clothing. The store focuses on a limited target market and provides excellent customer service. Julia's is using a ________________ pricing strategy.

Correct Answer
verified

Frank's Heating and Air Conditioning Company specializes in electric heat pumps. Frank keeps track of the price of natural gas, knowing that

Correct Answer
verified

Marlie designs and manufactures specialty furniture. She has a number of unique products but can only produce in limited quantities. Marlie will probably NOT use a market penetration strategy because

Correct Answer
verified

In a market with _______________, there are many firms providing differentiated products.

Correct Answer
verified

Small business consultants are constantly admonishing would-be entrepreneurs, "Beware of the overhead." Using an overhead of $100,000 and then an overhead of $200,000, with a contribution per unit of $50, determine the break-even points.

Correct Answer
verified
With an overhead of $100,000 and a contr...
View Answer

Earl was known for driving 30 miles to save a dollar on the price for his favorite beverage. Earl perceived price as __, while most consumers recognize price as the made to acquire a good or service.

Correct Answer
verified

The full price of a product or service includes all of the following EXCEPT

Correct Answer
verified

_________________ measures consumers' sensitivity to price changes.

Correct Answer
verified

A customer orientation toward pricing implicitly invokes the concept of

Correct Answer
verified

To discourage consumers from buying in gray markets, some manufacturers have

Correct Answer
verified

Because there are only a few firms in markets with oligopolistic competition,

Correct Answer
verified

The more substitutes that exist in a market,

Correct Answer
verified

Mario is the first retailer in town to sell games for Sony's new PlayStation 3 machine. Mario wants to quickly capture as much of the market for the new games as possible. Mario will likely use a __________ pricing strategy.

Correct Answer
verified

Unlike product, promotion, or place, price is the only part of the marketing mix

Correct Answer
verified

Correct Answer
verified
Total cost = fixed c...
View Answer

Odd prices suggest low quality.

Correct Answer
verified

Cheryl wants to quickly establish a dominant market share for her new line of ergonomic pens. To do this, she will likely use a market penetration pricing strategy.

Correct Answer
verified

At Ben's college, the local Dunkin' Donuts gives a 10% discount to students. Is this price discrimination? Why or why not?

Correct Answer
verified
When firms sell the same product to diff...
View Answer

__________ is the practice of colluding with other firms to control prices.

Correct Answer
verified

In U.S. markets, there are many substitute products for Fruit Loops cereal, suggesting the price elasticity of demand for Fruit Loops is high.

Correct Answer
verified

Exam 14: Pricing Concepts for Establishing Value

Julia's is an upscale women's clothing store. Prices are based on customers' beliefs about the value of the clothing. The store focuses on a limited target market and provides excellent customer service. Julia's is using a ________________ pricing strategy.

Correct AnswerverifiedShow Answer

Frank's Heating and Air Conditioning Company specializes in electric heat pumps. Frank keeps track of the price of natural gas, knowing that

Correct AnswerverifiedShow Answer

Marlie designs and manufactures specialty furniture. She has a number of unique products but can only produce in limited quantities. Marlie will probably NOT use a market penetration strategy because

Correct AnswerverifiedShow Answer

In a market with _______________, there are many firms providing differentiated products.

Correct AnswerverifiedShow Answer

Small business consultants are constantly admonishing would-be entrepreneurs, "Beware of the overhead." Using an overhead of $100,000 and then an overhead of $200,000, with a contribution per unit of $50, determine the break-even points.

Correct AnswerverifiedWith an overhead of $100,000 and a contr...View AnswerShow Answer

Earl was known for driving 30 miles to save a dollar on the price for his favorite beverage. Earl perceived price as ________________, while most consumers recognize price as the ______________ made to acquire a good or service.

Correct AnswerverifiedShow Answer

The full price of a product or service includes all of the following EXCEPT

Correct AnswerverifiedShow Answer

_________________ measures consumers' sensitivity to price changes.

Correct AnswerverifiedShow Answer

A customer orientation toward pricing implicitly invokes the concept of

Correct AnswerverifiedShow Answer

To discourage consumers from buying in gray markets, some manufacturers have

Correct AnswerverifiedShow Answer

Because there are only a few firms in markets with oligopolistic competition,

Correct AnswerverifiedShow Answer

The more substitutes that exist in a market,

Correct AnswerverifiedShow Answer

Mario is the first retailer in town to sell games for Sony's new PlayStation 3 machine. Mario wants to quickly capture as much of the market for the new games as possible. Mario will likely use a __________ pricing strategy.

Correct AnswerverifiedShow Answer

Unlike product, promotion, or place, price is the only part of the marketing mix

Correct AnswerverifiedShow Answer

Correct AnswerverifiedTotal cost = fixed c...View AnswerShow Answer

Odd prices suggest low quality.

Correct AnswerverifiedShow Answer

Cheryl wants to quickly establish a dominant market share for her new line of ergonomic pens. To do this, she will likely use a market penetration pricing strategy.

Correct AnswerverifiedShow Answer

At Ben's college, the local Dunkin' Donuts gives a 10% discount to students. Is this price discrimination? Why or why not?

Correct AnswerverifiedWhen firms sell the same product to diff...View AnswerShow Answer

__________ is the practice of colluding with other firms to control prices.

Correct AnswerverifiedShow Answer

In U.S. markets, there are many substitute products for Fruit Loops cereal, suggesting the price elasticity of demand for Fruit Loops is high.

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
With an overhead of $100,000 and a contr...
View Answer

Earl was known for driving 30 miles to save a dollar on the price for his favorite beverage. Earl perceived price as __, while most consumers recognize price as the made to acquire a good or service.

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
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Correct Answer
verified

Correct Answer
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Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Total cost = fixed c...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
When firms sell the same product to diff...
View Answer

Correct Answer
verified

Correct Answer
verified