Question 1

Figure 11-6a
-Suppose you are the owner of a picture frame store and you wish to calculate how many frames you must sell to cover your fixed and variable costs at a given price. Let's assume that the demand for your frames is strong, so the average price customers are willing to pay for each picture frame is $120. 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) . If your picture frame store sold 2,000 picture frames, what would your profit (or loss)  be?

Accepted Answer

A)   −$32,000
B)   $0
C)   $32,000
D)   $112,000
E)   $128,000F) A) and D)
G) D) and E)

Question 2

Price elasticity of demand measures how sensitive consumer demand and the firm's revenues are to changes in the product's price. Explain the difference between a product with elastic demand and a product with inelastic demand.

Accepted Answer

Elastic demand exists when a 1 percent d...

Question 3

The vertical axis of a demand curve graph represents

Accepted Answer

A)   market growth rate.
B)   relative market share.
C)   price per unit.
D)   potential profit in dollars.
E)   quantity demanded.F) B) and E)
G) B) and C)

Question 4

Factors that determine consumers' willingness and ability to pay for products and services are referred to as

Accepted Answer

A)   supply factors.
B)   demand factors.
C)   affordability factors.
D)   elasticity factors.
E)   macro environmental factors.F) None of the above
G) B) and E)

Question 5

Which of the following is a typical example of a fixed cost?

Accepted Answer

A)   taxes
B)   raw materials
C)   sales commissions
D)   executive salaries
E)   hourly wagesF) D) and E)
G) A) and C)

Question 6

Predatory pricing is

Accepted Answer

A)   most effective in the growth stage of the product life cycle.
B)   a popular technique preferred by online businesses.
C)   illegal but often difficult to prosecute.
D)   most effective in business-to-business marketing.
E)   one of the most widely used pricing practices for professional marketers.F) A) and B)
G) A) and D)

Question 7

A demand curve graph typically appears as

Accepted Answer

A)   a parabola with the apex representing the highest price that can be charged without losing customers.
B)   a diagonal line going from upper left to lower right demonstrating that as price goes down, demand goes up.
C)   an inverted parabola with the lowest point representing the lowest price that can be charged and still meet the company's profit objectives.
D)   a diagonal line going from lower left to upper right demonstrating that as prices go up, demand goes up proportionately.
E)   two intersecting lines that identify the point at which supply and demand are exactly the same.F) A) and D)
G) All of the above

Question 8

The largest US-based TV maker is

Accepted Answer

A)   Sharp.
B)   Panasonic.
C)   LG.
D)   Sony.
E)   VIZIO.F) A) and B)
G) D) and E)

Question 9

When you buy a used car from a CarMax dealership, you are offered the car at a "no haggle" price. You can buy it or not, but there is no negotiating the published price because of the seller's

Accepted Answer

A)   customary pricing strategy.
B)   one-price policy.
C)   uniform pricing policy.
D)   dynamic pricing policy.
E)   dynamic pricing strategy.F) C) and D)
G) All of the above

Question 10

The formula Total revenue − Total cost, or [(Unit price × Quantity sold)  − (Fixed cost + Variable cost) ], represents

Accepted Answer

A)   the value equation.
B)   the sales ratio.
C)   average revenue.
D)   the break-even point.
E)   the profit equation.F) A) and E)
G) B) and E)

Question 11

VIZIO is the market leader in the North American ________ market.

Accepted Answer

A)   designer eyewear
B)   virtual media
C)   smart TV
D)   3-D video game
E)   exotic travelF) C) and D)
G) A) and B)

Question 12

When is skimming pricing an effective strategy?

Accepted Answer

Skimming pricing is an effective strateg...

Question 13

Predatory pricing is

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 different prices to different buyers for goods of like grade and quality.
C)   the practice of charging a very low price for a product with the intent of driving competitors out of business.
D)   a conspiracy among firms to set prices for a product or service.
E)   a seller's requirement that the purchaser of one product must also buy another product in the line.F) None of the above
G) C) and D)

Question 14

The unit variable cost (UVC)  equals variable cost (VC)  divided by

Accepted Answer

A)   quantity (Q) .
B)   fixed costs (F
C)  .
C)   total cost (T
C)  .
D)   total revenue (TR) .
E)   price per unit of the product (P) .F) A) and B)
G) C) and D)

Question 15

Figure 11-3a
-Figure 11-3a above shows that when the price for Red Baron frozen cheese pizzas moves from $8 to $6 per unit along the demand curve D1, the quantity demanded

Accepted Answer

A)   increases from 2 to 3 million units per year.
B)   decreases from 3 to 2 million units per year.
C)   stays the same.
D)   increases from 6 to 8 million units per year.
E)   decreases from 8 to 6 million units per year.F) A) and E)
G) A) and D)

Question 16

Target return-on-investment pricing refers to

Accepted Answer

A)   setting a price to achieve an annual target ROA.
B)   adding a fixed percentage to the cost of all items in a specific product class.
C)   setting prices to achieve a profit that is a specified percentage of the sales volume.
D)   setting a price to achieve an annual target ROI.
E)   setting a price based on an annual specific dollar target volume of profit.F) All of the above
G) A) and E)

Question 17

The owner of a store that sells custom kitchen cabinets wishes to use a target return-on-sales pricing approach to establish a price for a typical section of cabinets. Assume that variable costs total $200 per unit, fixed cost is $44,000, and the storeowner desires a target profit of 20 percent return on sales at an annual volume of 400 cabinets. What price should be charged for a typical cabinet section?

Accepted Answer

A)   $263.50
B)   $311.00
C)   $387.50
D)   $445.50
E)   $775.00F) A) and B)
G) None of the above

Question 18

All of the following are demand factors except which?

Accepted Answer

A)   the price of similar products
B)   consumer tastes
C)   consumer income
D)   the availability of similar products
E)   the number of products in the lineF) B) and E)
G) C) and E)

Question 19

The break-even point (BEP)  = [Fixed cost ÷ (________ − Unit variable cost) ].

Accepted Answer

A)   Total cost
B)   Total expense
C)   Fixed cost
D)   Unit variable cost
E)   Unit priceF) A) and D)
G) A) and C)

Question 20

There are several factors that predict when a skimming pricing policy is likely to be most effective, including situations in which

Accepted Answer

A)   consumers tend to be price-sensitive.
B)   enough prospective customers are willing to buy immediately at a high initial price to make these sales profitable.
C)   leadership is expecting to meet high sales unit goals.
D)   a lower price will significantly reduce unit costs.
E)   consumers perceive your product to be similar to other products in the market.F) C) and D)
G) A) and D)

Exam 11: Pricing Products and Services

Correct Answer
verified

The vertical axis of a demand curve graph represents

Correct Answer
verified

Target return-on-investment pricing refers to

Correct Answer
verified

All of the following are demand factors except which?

Correct Answer
verified

There are several factors that predict when a skimming pricing policy is likely to be most effective, including situations in which

Correct Answer
verified

VIZIO is the market leader in the North American ________ market.

Correct Answer
verified

Price elasticity of demand measures how sensitive consumer demand and the firm's revenues are to changes in the product's price. Explain the difference between a product with elastic demand and a product with inelastic demand.

Correct Answer
verified
Elastic demand exists when a 1 percent d...
View Answer

The unit variable cost (UVC) equals variable cost (VC) divided by

Correct Answer
verified

The largest US-based TV maker is

Correct Answer
verified

Predatory pricing is

Correct Answer
verified

When is skimming pricing an effective strategy?

Correct Answer
verified
Skimming pricing is an effective strateg...
View Answer

When you buy a used car from a CarMax dealership, you are offered the car at a "no haggle" price. You can buy it or not, but there is no negotiating the published price because of the seller's

Correct Answer
verified

Correct Answer
verified

Figure 11-3a -Figure 11-3a above shows that when the price for Red Baron frozen cheese pizzas moves from $8 to $6 per unit along the demand curve D1, the quantity demanded

Correct Answer
verified

The formula Total revenue − Total cost, or [(Unit price × Quantity sold) − (Fixed cost + Variable cost) ], represents

Correct Answer
verified

A demand curve graph typically appears as

Correct Answer
verified

The break-even point (BEP) = [Fixed cost ÷ (________ − Unit variable cost) ].

Correct Answer
verified

Which of the following is a typical example of a fixed cost?

Correct Answer
verified

Predatory pricing is

Correct Answer
verified

Factors that determine consumers' willingness and ability to pay for products and services are referred to as

Correct Answer
verified

Exam 11: Pricing Products and Services

Correct AnswerverifiedShow Answer

The vertical axis of a demand curve graph represents

Correct AnswerverifiedShow Answer

Target return-on-investment pricing refers to

Correct AnswerverifiedShow Answer

All of the following are demand factors except which?

Correct AnswerverifiedShow Answer

There are several factors that predict when a skimming pricing policy is likely to be most effective, including situations in which

Correct AnswerverifiedShow Answer

VIZIO is the market leader in the North American ________ market.

Correct AnswerverifiedShow Answer

Price elasticity of demand measures how sensitive consumer demand and the firm's revenues are to changes in the product's price. Explain the difference between a product with elastic demand and a product with inelastic demand.

Correct AnswerverifiedElastic demand exists when a 1 percent d...View AnswerShow Answer

The unit variable cost (UVC) equals variable cost (VC) divided by

Correct AnswerverifiedShow Answer

The largest US-based TV maker is

Correct AnswerverifiedShow Answer

Predatory pricing is

Correct AnswerverifiedShow Answer

When is skimming pricing an effective strategy?

Correct AnswerverifiedSkimming pricing is an effective strateg...View AnswerShow Answer

When you buy a used car from a CarMax dealership, you are offered the car at a "no haggle" price. You can buy it or not, but there is no negotiating the published price because of the seller's

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Figure 11-3a -Figure 11-3a above shows that when the price for Red Baron frozen cheese pizzas moves from $8 to $6 per unit along the demand curve D1, the quantity demanded

Correct AnswerverifiedShow Answer

The formula Total revenue − Total cost, or [(Unit price × Quantity sold) − (Fixed cost + Variable cost) ], represents

Correct AnswerverifiedShow Answer

A demand curve graph typically appears as

Correct AnswerverifiedShow Answer

The break-even point (BEP) = [Fixed cost ÷ (________ − Unit variable cost) ].

Correct AnswerverifiedShow Answer

Which of the following is a typical example of a fixed cost?

Correct AnswerverifiedShow Answer

Predatory pricing is

Correct AnswerverifiedShow Answer

Factors that determine consumers' willingness and ability to pay for products and services are referred to as

Correct AnswerverifiedShow Answer

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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Elastic demand exists when a 1 percent d...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Skimming pricing is an effective strateg...
View Answer

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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