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Exam 14: Arriving at the Final Price

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Question 111

Multiple Choice

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Determining cost, volume, and profit relationships occurs during __________ of the price-setting process.

A) Step 2
B) Step 3
C) Step 4
D) Step 5
E) Step 6

F) A) and D)
G) B) and C)

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Question 112

Multiple Choice

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Setting the price of a line of products at a number of different specific price points is referred to as

A) odd-even pricing.
B) bundle pricing.
C) cost-plus pricing.
D) price lining.
E) prestige pricing.

F) A) and D)
G) None of the above

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Question 113

Multiple Choice

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A Patek Philippe Sky Moon Tourbillion men's wristwatch is among the most expensive in the world, costing more than $1.5 million in 2013. This is an example of a __________ strategy.

Target return-on-investment pricing refers to

Price discrimination is illegal under the

Skimming pricing refers to

Price war refers to

Yield management is considered to be a __________ approach to pricing.

With a cost-oriented pricing strategy, a price setter stresses the __________ side of the pricing problem and the price is set by looking at __________.

Which of the following statements regarding price cutting is most accurate?

Different brands within a company's product line generally have different profit margins; for example, items with higher price lines have higher profit margins. Assume that Nike Variety tennis shoes have variable costs of $6 and sell for $24. Also assume that Nike Wimbledon tennis shoes have variable costs of $38 and sell for $48, but when fixed overhead is added, the shoe is unprofitable by $2 per pair. Which statement is most accurate regarding Nike's pricing approach with these two product lines?

According to the textbook, Revlon cosmetics uses __________ pricing.

Target return-on-sales pricing refers to

The first Apple iPhone was introduced in 2007 at an initial price of $600. People waited in line overnight so they could be one of the first to own this unique smartphone. Which pricing strategy did Apple use to help recoup its costs for developing the smartphone?

Using __________, many retailers deliberately sell products below their normal prices (and sometimes below cost) to attract attention and additional store traffic.

The retail price of DVD players has decreased from $900 in the mid-1990s to about $50 today. This is due in large part to

Which of the following statements regarding price lining is most accurate?

In some cases, manufacturers design products for different price points and retailers apply __________ to achieve the three or four different price points offered to consumers.

Rather than billing clients by the hour, some lawyers and their clients agree on a fixed fee based on expected costs plus an agreed upon level of profit for the law firm. Which pricing approach are they using?

A hardware store advertises a ⅜-inch Black and Decker Power Drill for $29.95. You enter the store intending to purchase the drill. The salesperson informs you that they are all sold out. She tells you that the "sale" drills were factory seconds and that if you are going to be doing any kind of serious woodworking, you should buy the Model 3309, which sells for $49.99. This scenario has elements of which type of illegal pricing practice?