Question 1

Larry's Lawn Care allows customers to use a credit card for purchases.Larry pays 4 percent of the sale to the credit card company.To promote more business,Larry decides to offer a lower price to customers paying cash-that price being 3 percent less than the standard list price.Larry is giving his customers a(n)

Accepted Answer

A)  functional discount.
B)  trade-in allowance.
C)  promotional allowance.
D)  cash discount.
E)  everyday low price.F) A) and B)
G) B) and C)

Question 2

The prices for all furniture sold at American Furniture Warehouse end in $9.99,such as $599.99,$899.99,etc.American Furniture Warehouse uses

Accepted Answer

A)  odd-even pricing.
B)  dynamic pricing.
C)  price lining.
D)  bundle pricing.
E)  product line pricing.F) B) and E)
G) B) and D)

Question 3

The key to setting a final price for a product is finding an approximate price level to use as a reasonable starting point.Four common approaches to selecting an approximate price level are: (1) demand-oriented; (2) cost-oriented; (3) profit-oriented;and (4) __________ approaches.

Accepted Answer

A)  revenue-oriented
B)  distribution-oriented
C)  stakeholder-oriented
D)  competition-oriented
E)  cause-orientedF) A) and E)
G) B) and C)

Question 4

Lady Marion Seafood,Inc.sells 5-pound packages of Alaskan salmon.Assume that its unit variable cost per package is $30 and its fixed cost is $250,000.It wants a target profit of $38,000 based on a volume of 16,000 packages.What should the firm charge for a 5-pound package of salmon?

Accepted Answer

A)  $25.00
B)  $33.94
C)  $40.00
D)  $48.00
E)  $61.25F) B) and E)
G) C) and E)

Question 5

Marginal analysis might take the form of such questions as,"Should we extend our hours to include Sundays?" or "What if we put more apples in the pie?" The basic principle is that

Accepted Answer

A)  as long as a marketing action breaks even,the action is worth taking.
B)  expected incremental revenues from pricing and other marketing actions must more than offset incremental costs.
C)  you "don't rock the boat" if your program is making a profit;"leave well enough alone."
D)  if you are not willing to take risks,even if the numbers tell you otherwise,your business will ultimately fail.
E)  marketing and finance are two different animals: "If it feels right in your gut…go for it."F) B) and E)
G) A) and B)

Question 6

With cost-oriented approaches,a price setter stresses the cost side of the pricing problem,not the __________ side.

Accepted Answer

A)  shareholder equity
B)  income
C)  service
D)  supply
E)  demandF) None of the above
G) A) and D)

Question 7

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

Accepted Answer

A)  penetration pricing
B)  target pricing
C)  bundle pricing
D)  loss leader pricing
E)  prestige pricingF) B) and E)
G) A) and E)

Question 8

Manufacturers of generic brands use which method of competition-oriented pricing?

Accepted Answer

A)  penetration pricing
B)  below-market pricing
C)  loss-leader pricing
D)  prestige pricing
E)  skimming pricingF) All of the above
G) A) and B)

Question 9

When establishing product line pricing,the lowest-priced item is typically positioned as

Accepted Answer

A)  the youngest product item in the line.
B)  the smallest selling product item in the line.
C)  the lost-cost item in the line in terms of quality and features.
D)  the profit leader for the rest of the product line.
E)  the traffic builder designed to capture the attention of first-time buyers.F) C) and D)
G) A) and B)

Question 10

The reward a manufacturer gives to wholesalers and retailers for marketing functions they will perform in the future is referred to as __________.

Accepted Answer

A)  seasonal discounts
B)  cash discounts
C)  promotional allowances
D)  trade discounts
E)  trade-in allowancesF) D) and E)
G) A) and D)

Question 11

A conspiracy among firms to set prices for a product is referred to as

Accepted Answer

A)  price discrimination.
B)  price fixing.
C)  predatory pricing.
D)  tying arrangements.
E)  exclusive dealing.F) A) and E)
G) B) and C)

Question 12

A unique feature of the Robinson-Patman Act is that it allows for price differentials to different customers under several conditions.Which of the following practices would be permitted?

Accepted Answer

A)  Using price differentials when price differences are given on the basis of other family businesses.
B)  Using price differentials when charging different prices to different buyers for goods of like grade or quality.
C)  When price differences are quoted to selected buyers in good faith to meet competitors' prices and are not intended to injure competition.
D)  Using price differentials when charging different prices on the basis of religious affiliation.
E)  When price differences result from changing market conditions,avoiding obsolescence of seasonal merchandise,including perishables,or closing out sales.F) C) and E)
G) A) and D)

Question 13

Which of the following statements regarding a trade-in allowance is most accurate?

Accepted Answer

A)  A trade-in allowance is a noncash exchange of one product for another of equal or lesser value.
B)  A trade-in allowance is an effective way to lower the price a buyer has to pay without formally reducing the list price.
C)  A trade-in allowance is a cash-back payment when a more expensive item is replaced with a less expensive one.
D)  A trade-in allowance is the return of money based on proof of purchase.
E)  A trade-in allowance is a cash payment to a retailer for extra in-store support or special featuring of the brand.F) C) and D)
G) A) and B)

Question 14

Two of the three types of adjustments to list or quoted price are

Accepted Answer

A)  profit-oriented and marginal adjustments.
B)  fixed- price and dynamic price adjustments.
C)  discounts and marginal adjustments.
D)  discounts and allowances.
E)  incremental costs and incremental revenues.F) C) and D)
G) A) and B)

Question 15

When buying highly technical,few-of-a-kind products such as hydroelectric power plants,governments have found that general contractors are reluctant to specify a formal,fixed price for the procurement.Therefore,these contractors use __________ to compensate them for any cost overruns.

Accepted Answer

A)  cost-plus-percentage-of-cost pricing
B)  experience curve pricing
C)  cost-plus fixed-fee pricing
D)  standard markup pricing
E)  yield management pricingF) B) and C)
G) A) and E)

Question 16

Which cost-oriented pricing method holds that a product's unit costs predictably decline by 10 to 30 percent each time its production volume doubles?

Accepted Answer

A)  experience curve pricing
B)  cost-plus percentage-of-cost pricing
C)  capacity management pricing
D)  standard markup pricing
E)  derived demand pricingF) All of the above
G) C) and E)

Question 17

The price for Nintendo's Wii video game console was likely insufficient to cover its fixed and variable costs.However,the price of its video games was set high enough to cover its video game console's loss and deliver a handsome profit for the entire Nintendo product line.This example illustrates Nintendo's use of

Accepted Answer

A)  bundle pricing.
B)  product-line pricing.
C)  price lining.
D)  customary pricing.
E)  loss-leader pricing.F) A) and E)
G) A) and D)

Question 18

A penetration pricing policy is MOST LIKELY to be effective when

Accepted Answer

A)  unit production and marketing costs fall dramatically as production volumes increase.
B)  enough prospective customers are willing to buy immediately at the high initial price to make these sales profitable.
C)  lowering the price has only a minor effect on increasing the sales volume and reducing the unit cost.
D)  the high initial price will not attract competitors.
E)  customers interpret the high price as signifying high quality.F) A) and B)
G) A) and C)

Question 19

Adding a fixed percentage to the cost of all items in a specific product class is referred to as

Accepted Answer

A)  target profit pricing.
B)  standard markup pricing.
C)  target return-on-investment pricing.
D)  customary pricing.
E)  everyday low pricing.F) A) and B)
G) C) and D)

Question 20

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.F) B) and D)
G) A) and B)

Exam 14: Arriving at the Final Price

Manufacturers of generic brands use which method of competition-oriented pricing?

Correct Answer
verified

Price fixing refers to

Correct Answer
verified

When buying highly technical,few-of-a-kind products such as hydroelectric power plants,governments have found that general contractors are reluctant to specify a formal,fixed price for the procurement.Therefore,these contractors use __________ to compensate them for any cost overruns.

Correct Answer
verified

A unique feature of the Robinson-Patman Act is that it allows for price differentials to different customers under several conditions.Which of the following practices would be permitted?

Correct Answer
verified

Correct Answer
verified

With cost-oriented approaches,a price setter stresses the cost side of the pricing problem,not the __________ side.

Correct Answer
verified

The prices for all furniture sold at American Furniture Warehouse end in $9.99,such as $599.99,$899.99,etc.American Furniture Warehouse uses

Correct Answer
verified

When establishing product line pricing,the lowest-priced item is typically positioned as

Correct Answer
verified

Correct Answer
verified

Marginal analysis might take the form of such questions as,"Should we extend our hours to include Sundays?" or "What if we put more apples in the pie?" The basic principle is that

Correct Answer
verified

Which of the following statements regarding a trade-in allowance is most accurate?

Correct Answer
verified

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

Correct Answer
verified

The key to setting a final price for a product is finding an approximate price level to use as a reasonable starting point.Four common approaches to selecting an approximate price level are: (1) demand-oriented; (2) cost-oriented; (3) profit-oriented;and (4) __________ approaches.

Correct Answer
verified

Adding a fixed percentage to the cost of all items in a specific product class is referred to as

Correct Answer
verified

Two of the three types of adjustments to list or quoted price are

Correct Answer
verified

Lady Marion Seafood,Inc.sells 5-pound packages of Alaskan salmon.Assume that its unit variable cost per package is $30 and its fixed cost is $250,000.It wants a target profit of $38,000 based on a volume of 16,000 packages.What should the firm charge for a 5-pound package of salmon?

Correct Answer
verified

A penetration pricing policy is MOST LIKELY to be effective when

Correct Answer
verified

Which cost-oriented pricing method holds that a product's unit costs predictably decline by 10 to 30 percent each time its production volume doubles?

Correct Answer
verified

The reward a manufacturer gives to wholesalers and retailers for marketing functions they will perform in the future is referred to as __________.

Correct Answer
verified

A conspiracy among firms to set prices for a product is referred to as

Correct Answer
verified

Exam 14: Arriving at the Final Price

Manufacturers of generic brands use which method of competition-oriented pricing?

Correct AnswerverifiedShow Answer

Price fixing refers to

Correct AnswerverifiedShow Answer

When buying highly technical,few-of-a-kind products such as hydroelectric power plants,governments have found that general contractors are reluctant to specify a formal,fixed price for the procurement.Therefore,these contractors use __________ to compensate them for any cost overruns.

Correct AnswerverifiedShow Answer

A unique feature of the Robinson-Patman Act is that it allows for price differentials to different customers under several conditions.Which of the following practices would be permitted?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

With cost-oriented approaches,a price setter stresses the cost side of the pricing problem,not the __________ side.

Correct AnswerverifiedShow Answer

The prices for all furniture sold at American Furniture Warehouse end in $9.99,such as $599.99,$899.99,etc.American Furniture Warehouse uses

Correct AnswerverifiedShow Answer

When establishing product line pricing,the lowest-priced item is typically positioned as

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Marginal analysis might take the form of such questions as,"Should we extend our hours to include Sundays?" or "What if we put more apples in the pie?" The basic principle is that

Correct AnswerverifiedShow Answer

Which of the following statements regarding a trade-in allowance is most accurate?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The key to setting a final price for a product is finding an approximate price level to use as a reasonable starting point.Four common approaches to selecting an approximate price level are: (1) demand-oriented; (2) cost-oriented; (3) profit-oriented;and (4) __________ approaches.

Correct AnswerverifiedShow Answer

Adding a fixed percentage to the cost of all items in a specific product class is referred to as

Correct AnswerverifiedShow Answer

Two of the three types of adjustments to list or quoted price are

Correct AnswerverifiedShow Answer

Lady Marion Seafood,Inc.sells 5-pound packages of Alaskan salmon.Assume that its unit variable cost per package is $30 and its fixed cost is $250,000.It wants a target profit of $38,000 based on a volume of 16,000 packages.What should the firm charge for a 5-pound package of salmon?

Correct AnswerverifiedShow Answer

A penetration pricing policy is MOST LIKELY to be effective when

Correct AnswerverifiedShow Answer

Which cost-oriented pricing method holds that a product's unit costs predictably decline by 10 to 30 percent each time its production volume doubles?

Correct AnswerverifiedShow Answer

The reward a manufacturer gives to wholesalers and retailers for marketing functions they will perform in the future is referred to as __________.

Correct AnswerverifiedShow Answer

A conspiracy among firms to set prices for a product is referred to as

Correct AnswerverifiedShow Answer

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