Question 1

Which of the following statements regarding odd-even pricing is most accurate?

Accepted Answer

A)  Odd-even pricing is designed to give the consumer a better set of pricing alternatives.
B)  Odd-even pricing can be used in conjunction with a skimming strategy, but should not be used with a penetration strategy.
C)  Odd-even pricing does not work if the product is health care related.
D)  Overuse of odd-ending prices tends to mute its effect on demand.
E)  Odd-ending prices are best used with large ticket items; it loses its effectiveness with moderate to low ticket items.F) C) and E)
G) C) and D)

Question 2

Inelastic demand exists when

Accepted Answer

A)  a small percentage increase in price produces a smaller percentage decrease in quantity demanded and total revenue falls.
B)  a small percentage decrease in price produces a smaller percentage increase in quantity demanded and total revenue falls.
C)  an increase in price causes a larger increase in quantity demanded and total revenue falls to zero.
D)  the quantity demanded remains the same regardless of level of price and total revenue is unchanged.
E)  a small percentage decrease in price produces a smaller percentage decrease in quantity demanded and total revenue increases.F) All of the above
G) D) and E)

Question 3

At a price of $3 each, SH Λ\LambdaΛ PE magazine sells 1.25 million copies of its magazine targeted to young women seeking a healthier lifestyle.If the price per issue is increased to $3.25 each, only 1 million copies will be sold.For the information provided, the price elasticity of demand for SH Λ\LambdaΛ PE magazine in this price range can be described as

Accepted Answer

A)  inelastic demand.
B)  elastic demand.
C)  unitary demand.
D)  null elasticity.
E)  subsidized elasticity. F) A) and C)
G) B) and D)

Question 4

Prestige pricing refers to

Accepted Answer

A)  charging different prices to different buyers for goods of like grade and quality.
B)  setting a high price so that quality-or status-conscious consumers will be attracted to the product and buy it.
C)  setting a low initial price on a new product to appeal immediately to the mass market odd-even pricing.
D)  setting a market price for product or product class oriented on a subjective feel for the competitors' price or market price as the benchmark.
E)  setting a price that is dictated by tradition, a standardized channel of distribution, or other competitive factors.F) A) and D)
G) None of the above

Question 5

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)  As real consumer income decreases, demand for a product increases.F) A) and E)
G) D) and E)

Question 6

many segments of the market are price sensitive.

Accepted Answer

A)  lowering the price has only a minor effect on increasing sales volume and reducing unit costs
B)  the high initial prices do not attract competitors
C)  a low initial price discourages competitors from entering the market
D)  customers interpret high prices as signifying high quality
E)  customers are willing to buy immediately at the high initial priceF) B) and D)
G) C) and E)

Question 7

The break-even point for a large grain farming operation was calculated to be 2 million bushels of corn.Break-even analysis would take place in which stage of the price-setting process?

Accepted Answer

A)  identifying pricing objectives and constraints
B)  determining cost, volume, and profit relationships
C)  estimating demand and revenue
D)  select an appropriate (approximate)  price level
E)  make special adjustments to list or quoted priceF) B) and D)
G) All of the above

Question 8

You can buy a General Electric dishwasher for $399, or you can buy a similar sized under-the-counter Bosch brand dishwasher for $989.Since Bosch uses its pricing strategy to project a high-quality product image, it is most likely using __________ pricing.

Accepted Answer

A)  bait and switch
B)  standard markup
C)  prestige
D)  penetration
E)  cost plus fixed-feeF) A) and C)
G) All of the above

Question 9

Elastic demand exists when a(n)

Accepted Answer

A)  a small percentage decrease in price produces a smaller percentage increase in quantity demanded and total revenue falls.
B)  a small increase in price results in a relatively large decrease in demand.
C)  a small percentage decrease in price produces a larger percentage increase in quantity demanded and total revenue increases.
D)  an increase in price causes a larger increase in quantity demanded and total revenue falls to zero.
E)  a small percentage decrease in price produces a smaller percentage decrease in quantity demanded and total revenue increases.F) B) and C)
G) A) and E)

Question 10

Skimming pricing refers to

Accepted Answer

A)  setting the lowest initial price when introducing a new or innovative product in order to "skim" sales from competitors.
B)  setting the highest initial price that customers really desiring the product are willing to pay, when introducing a new or innovative product.
C)  setting the lowest initial price possible, skimming right above the point of profitability, in order to secure a larger market share.
D)  purposely setting the highest price possible to repel the mass market and cultivate upper echelon buyers even though the actual value of the item is extremely small.
E)  selling off the lowest producing products from a company's product line and turning them over to resellers to skim off any remaining profit potential.F) B) and C)
G) B) and D)

Question 11

To calculate _________, you would compute: (Unit price x Quantity sold)  - (Fixed cost + Variable cost) .

Accepted Answer

A)  profit
B)  total revenue
C)  marginal revenue
D)  average revenue
E)  break-even pointF) A) and B)
G) C) and E)

Question 12

Products such as disposable baby diapers usually have

Accepted Answer

A)  inelastic demand.
B)  elastic demand.
C)  unitary demand.
D)  null elasticity.
E)  subsidized elasticity.F) B) and C)
G) All of the above

Question 13

Basic to setting a product's price is the extent of _________.This information is used in estimating the revenues the firm expects to receive.

Accepted Answer

A)  management's commitment to the product, relative to other products in the line
B)  curiosity or interest potential consumers expressed during market testing
C)  customer demand for it
D)  the firm's promotional budget
E)  distribution requirementsF) A) and B)
G) None of the above

Question 14

Forever Quilting is a small company that makes quilting kits priced at $120.The costs of the materials that go into each kit are $45.It costs $5 in labor to assemble a kit.The company has monthly expenses of $1,000 for rent and insurance, $200 for heat and electricity, $500 for advertising, and $4,500 for the monthly salary of its owner.Forever Quilting's unit variable cost for its kits is

Accepted Answer

A)  $45.
B)  $50.
C)  $120.
D)  $170.
E)  $225.F) A) and D)
G) D) and E)

Exam 12: Pricing Products and Services

The break-even point for a large grain farming operation was calculated to be 2 million bushels of corn.Break-even analysis would take place in which stage of the price-setting process?

Correct Answer
verified

To calculate _________, you would compute: (Unit price x Quantity sold) - (Fixed cost + Variable cost) .

Correct Answer
verified

Elastic demand exists when a(n)

Correct Answer
verified

Correct Answer
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Products such as disposable baby diapers usually have

Correct Answer
verified

many segments of the market are price sensitive.

Correct Answer
verified

Skimming pricing refers to

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

Correct Answer
verified

Prestige pricing refers to

Correct Answer
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You can buy a General Electric dishwasher for $399, or you can buy a similar sized under-the-counter Bosch brand dishwasher for $989.Since Bosch uses its pricing strategy to project a high-quality product image, it is most likely using __________ pricing.

Correct Answer
verified

Basic to setting a product's price is the extent of _________.This information is used in estimating the revenues the firm expects to receive.

Correct Answer
verified

Which of the following statements regarding odd-even pricing is most accurate?

Correct Answer
verified

Inelastic demand exists when

Correct Answer
verified

Correct Answer
verified

Exam 12: Pricing Products and Services

The break-even point for a large grain farming operation was calculated to be 2 million bushels of corn.Break-even analysis would take place in which stage of the price-setting process?

Correct AnswerverifiedShow Answer

To calculate _________, you would compute: (Unit price x Quantity sold) - (Fixed cost + Variable cost) .

Correct AnswerverifiedShow Answer

Elastic demand exists when a(n)

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Products such as disposable baby diapers usually have

Correct AnswerverifiedShow Answer

many segments of the market are price sensitive.

Correct AnswerverifiedShow Answer

Skimming pricing refers to

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Prestige pricing refers to

Correct AnswerverifiedShow Answer

You can buy a General Electric dishwasher for $399, or you can buy a similar sized under-the-counter Bosch brand dishwasher for $989.Since Bosch uses its pricing strategy to project a high-quality product image, it is most likely using __________ pricing.

Correct AnswerverifiedShow Answer

Basic to setting a product's price is the extent of _________.This information is used in estimating the revenues the firm expects to receive.

Correct AnswerverifiedShow Answer

Which of the following statements regarding odd-even pricing is most accurate?

Correct AnswerverifiedShow Answer

Inelastic demand exists when

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct Answer
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