Question 1

A shift in the demand curve means:

Accepted Answer

A)  the availability of substitutes remains the same.
B)  at a given price, more (or less)  product is sold.
C)  consumer incomes remain the same.
D)  consumer tastes remain the same.E) B) and D)
F) B) and C)

Question 2

If consumers can easily find close substitutes for a good or service, the product's demand tends to be inelastic.

Accepted Answer

A) True 
 B)False

Question 3

Parell's, a shampoo manufacturer, carried an ad campaign where it asked television viewers to identify the hair that was shampooed and conditioned with Parell's products and the hair on which expensive salon hair-care products were used.The idea of the ad was to make the viewers realize that a person could not distinguish between the hair that used the comparatively cheaper Parell's brand from hair that used the very expensive salon brand.By making price its selling point, Parell's is most likely using _____.

Accepted Answer

A)  demand backward pricing
B)  below-market pricing
C)  loss-leader pricing
D)  skimming pricingE) A) and B)
F) B) and C)

Question 4

Which of the following types of pricing involves summing the total unit expenditure of providing a product or service and adding a specific amount to the expenditure to arrive at the price?

Accepted Answer

A)  standard markup pricing
B)  experience curve pricing
C)  cost-plus pricing
D)  penetration pricingE) A) and D)
F) A) and B)

Question 5

_____ is the practice of charging a very low price for a product with the intent of driving competitors out of business.

Accepted Answer

A)  Price fixing
B)  Price discrimination
C)  Predatory pricing
D)  Deceptive pricingE) All of the above
F) A) and B)

Question 6

Sails Ahoy, a small company that makes model sailboat kits priced at $120 each, spends $45 on materials and $5 in labour to produce each kit.The company incurs monthly expenses of $1,000 for rent and insurance, $200 for heat and electricity, $500 for advertising, and $3,500 for the proprietor's salary.If Sails Ahoy sells 150 kits in a given month, its monthly profit will be _____.

Accepted Answer

A)  $5,300
B)  $10,500
C)  $12,700
D)  $12,800E) B) and D)
F) B) and C)

Question 7

Value is considered to be the ratio of perceived benefits to the price.

Accepted Answer

A) True 
 B)False

Question 8

The owner of a small restaurant that sells take-out fried chicken spends monthly amounts of $2,500 in rent, $500 in utilities, $750 in loan interest, $200 in insurance premium, and $250 for advertising on local buses.A bucket of take-out chicken is priced at $9.50.Unit variable costs for the bucket of chicken are $5.50. At what level of sales, in dollars of revenue, will the restaurant break even?

Accepted Answer

A)  $9,386
B)  $9,500
C)  $9,975
D)  $29,925E) B) and C)
F) A) and B)

Question 9

Other things equal, if a firm finds the demand for one of its products is inelastic, it can increase its total revenues by _____.

Accepted Answer

A)  raising its price
B)  lowering its price
C)  reducing fixed costs
D)  raising its variable costsE) A) and B)
F) A) and C)

Question 10

Describe the pricing constraints a firm is likely to face.

Accepted Answer

Pricing constraints are factors that lim...

Question 11

A high initial price used by companies to help recover research and development costs is called a _____ strategy.

Accepted Answer

A)  penetration pricing
B)  yield management pricing
C)  price skimming
D)  prestige pricingE) A) and D)
F) B) and C)

Question 12

Which of the following statements about cost-oriented approaches is true?

Accepted Answer

A)  These methods focus on the demand side of the pricing problem and involve stimulating demand and decreasing revenue.
B)  In the cost-based approaches, price is set by looking at the production and marketing costs and then adding enough to cover direct expenses, overhead, and profit.
C)  Target return on investment is an example of a cost-based method.
D)  Experience curve pricing, a type of cost-based approach, is simple to use because costs predictably decrease by 25 percent with each doubling of production.E) All of the above
F) C) and D)

Question 13

_____ refers to how sensitive consumer demand and the firm's revenues are to changes in the product's price.

Accepted Answer

A)  Marginal revenue
B)  Price elasticity of demand
C)  Average demand
D)  Marginal demandE) C) and D)
F) B) and D)

Question 14

Target profit pricing is:

Accepted Answer

A)  adjusting the price of a product so that it is "in line" with that of its largest competitor.
B)  setting the price of a line of products at a number of different price points.
C)  adding a fixed percentage to the cost of all items in a specific product class.
D)  setting an annual goal of a specific dollar amount of profit.E) C) and D)
F) B) and D)

Question 15

Which of the following statements about the factors that influence demand is true?

Accepted Answer

A)  As the availability of close substitutes increases, the demand for a product increases.
B)  As real consumer income increases, demand for a product increases.
C)  As the price of close substitutes increases, demand for a product declines.
D)  Changing consumer tastes have little impact on demand for a product.E) A) and B)
F) None of the above

Question 16

Kate & Hark's, a custom kitchen cabinet store, has received a bulk order for the supply of 400 cabinets.The variable cost incurred is $200 per unit and the fixed cost is $44,000. If a target profit of 20 percent of sales is desired, what price should be charged for a typical cabinet section?

Accepted Answer

A)  $372.00
B)  $311.00
C)  $445.50
D)  $387.50E) All of the above
F) A) and B)

Question 17

Which of the following is NOT one of the four general approaches to pricing:

Accepted Answer

A)  Demand oriented
B)  Cost oriented
C)  Competition oriented
D)  Break-even orientedE) All of the above
F) A) and C)

Question 18

Odd-even pricing is:

Accepted Answer

A)  setting prices one way for product lines and another way for individual brands.
B)  setting prices of luxury items at even price points and setting the price of necessities at odd price points.
C)  setting prices a few dollars or cents under an even number.
D)  a method of pricing where price often falls following the reduction of costs associated with the firm's production experience.E) B) and C)
F) C) and D)

Question 19

In a flexible-price policy, prices are set based on individual buyers and purchase situations in light of demand, cost, and competitive factors.

Accepted Answer

A) True 
 B)False

Question 20

The demand for a product falls as the prices of its substitutes fall.

Accepted Answer

A) True 
 B)False

Exam 9: Pricing

Which of the following statements about cost-oriented approaches is true?

Correct Answer
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Correct Answer
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_____ refers to how sensitive consumer demand and the firm's revenues are to changes in the product's price.

Correct Answer
verified

Kate & Hark's, a custom kitchen cabinet store, has received a bulk order for the supply of 400 cabinets.The variable cost incurred is $200 per unit and the fixed cost is $44,000. If a target profit of 20 percent of sales is desired, what price should be charged for a typical cabinet section?

Correct Answer
verified

In a flexible-price policy, prices are set based on individual buyers and purchase situations in light of demand, cost, and competitive factors.

Correct Answer
verified

Other things equal, if a firm finds the demand for one of its products is inelastic, it can increase its total revenues by _____.

Correct Answer
verified

Correct Answer
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A high initial price used by companies to help recover research and development costs is called a _____ strategy.

Correct Answer
verified

Value is considered to be the ratio of perceived benefits to the price.

Correct Answer
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Correct Answer
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The demand for a product falls as the prices of its substitutes fall.

Correct Answer
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A shift in the demand curve means:

Correct Answer
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Which of the following statements about the factors that influence demand is true?

Correct Answer
verified

If consumers can easily find close substitutes for a good or service, the product's demand tends to be inelastic.

Correct Answer
verified

Which of the following is NOT one of the four general approaches to pricing:

Correct Answer
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Describe the pricing constraints a firm is likely to face.

Correct Answer
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Pricing constraints are factors that lim...
View Answer

_____ is the practice of charging a very low price for a product with the intent of driving competitors out of business.

Correct Answer
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Target profit pricing is:

Correct Answer
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Odd-even pricing is:

Correct Answer
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Which of the following types of pricing involves summing the total unit expenditure of providing a product or service and adding a specific amount to the expenditure to arrive at the price?

Correct Answer
verified

Exam 9: Pricing

Which of the following statements about cost-oriented approaches is true?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

_____ refers to how sensitive consumer demand and the firm's revenues are to changes in the product's price.

Correct AnswerverifiedShow Answer

Kate & Hark's, a custom kitchen cabinet store, has received a bulk order for the supply of 400 cabinets.The variable cost incurred is $200 per unit and the fixed cost is $44,000. If a target profit of 20 percent of sales is desired, what price should be charged for a typical cabinet section?

Correct AnswerverifiedShow Answer

In a flexible-price policy, prices are set based on individual buyers and purchase situations in light of demand, cost, and competitive factors.

Correct AnswerverifiedShow Answer

Other things equal, if a firm finds the demand for one of its products is inelastic, it can increase its total revenues by _____.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A high initial price used by companies to help recover research and development costs is called a _____ strategy.

Correct AnswerverifiedShow Answer

Value is considered to be the ratio of perceived benefits to the price.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The demand for a product falls as the prices of its substitutes fall.

Correct AnswerverifiedShow Answer

A shift in the demand curve means:

Correct AnswerverifiedShow Answer

Which of the following statements about the factors that influence demand is true?

Correct AnswerverifiedShow Answer

If consumers can easily find close substitutes for a good or service, the product's demand tends to be inelastic.

Correct AnswerverifiedShow Answer

Which of the following is NOT one of the four general approaches to pricing:

Correct AnswerverifiedShow Answer

Describe the pricing constraints a firm is likely to face.

Correct AnswerverifiedPricing constraints are factors that lim...View AnswerShow Answer

_____ is the practice of charging a very low price for a product with the intent of driving competitors out of business.

Correct AnswerverifiedShow Answer

Target profit pricing is:

Correct AnswerverifiedShow Answer

Odd-even pricing is:

Correct AnswerverifiedShow Answer

Which of the following types of pricing involves summing the total unit expenditure of providing a product or service and adding a specific amount to the expenditure to arrive at the price?

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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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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Pricing constraints are factors that lim...
View 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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