Question 1

FIGURE 12-2 
-What price policy does the Rock and Roll Hall of Fame (Figure 12-2 above)  use to set prices?

Accepted Answer

A)  cost-plus
B)  experience curve
C)  standard markup
D)  yield management
E)  price liningF) C) and D)
G) A) and E)

Question 2

Price fixing is illegal under per se under the

Accepted Answer

A)  Sherman Act.
B)  Consumer Goods Pricing Act.
C)  Robinson-Patman Act.
D)  Federal Trade Commission Act.
E)  Clayton Act.F) C) and D)
G) None of the above

Question 3

The Wm.Wrigley Jr.Co.recently introduced a new flavor of Orbit brand sugar free chewing gum - mint mojito.The introductory price was low so that it would create loyal customers for the flavor quickly.In this example, Wrigley is using

Accepted Answer

A)  price lining.
B)  odd-even pricing.
C)  skimming pricing.
D)  penetration pricing.
E)  demand-backward pricing.F) B) and E)
G) None of the above

Question 4

FOB origin pricing refers to

Accepted Answer

A)  a method of "free on board" pricing where the price the seller sets includes all transportation costs.
B)  a method of pricing where taxes and tariffs are adjusted based upon the origin of a product and not its destination.
C)  a method of pricing where taxes and tariffs are adjusted based upon the destination of a product and not its place of origin.
D)  the "free on board" (FO
B)   price the seller quotes that includes only the cost of loading the product on the vehicle and specifies the name of the location where the loading is to occur (seller's factory or warehouse) .
E)  an agreement that no pricing changes can be made by the buyer or seller, once the freight is placed aboard its specified carrier.F) A) and E)
G) A) and C)

Question 5

While pricing objectives frequently reflect corporate goals, pricing constraints often relate to

Accepted Answer

A)  stockholder demands.
B)  political ideology.
C)  conditions existing in the marketplace.
D)  cultural mores and norms.
E)  the financial realities within the organization itself.F) C) and E)
G) All of the above

Question 6

Setting a market price for a product or product class based on a subjective feel for the competitors' price or market price as the benchmark is referred to as

Accepted Answer

A)  customary pricing.
B)  above-, at-,or below-market pricing.
C)  traditional markup pricing.
D)  complementary pricing.
E)  experience curve pricing.F) B) and C)
G) A) and E)

Question 7

FIGURE 12-1 
-Figure 12-1 above represents the four approaches for selecting an appropriate price level.Cubicle "A" represents which approach to finding the approximate price level according to the items listed in the cell?

Accepted Answer

A)  demand-oriented approach
B)  cost-oriented approach
C)  profit-oriented approach
D)  competition-oriented approach
E)  profit-equation approachF) A) and B)
G) A) and E)

Question 8

The executive vice president of Washburn Guitars has set a sales target of 2,000 units for a new line of guitars.This type of objective is most closely related to a(n)  ________ pricing objective.

Accepted Answer

A)  profit
B)  target return
C)  unit volume
D)  market share
E)  survivalF) D) and E)
G) A) and B)

Question 9

The manufacturer of a new kind of fat-free ice cream that has the consistency and taste of regular ice cream is thinking of using a penetration pricing strategy for its new product.Which of the following conditions would argue against using a penetration pricing strategy for the tasty fat-free ice cream?

Accepted Answer

A)  The ice cream market is highly conservative.
B)  A large portion of the market has inelastic demand for ice cream - over a fairly broad range of prices.
C)  Economies of scale in production would be substantial.
D)  Retailers are not willing to pay for new brands of premium ice cream in the already overcrowded category.
E)  Once the initial price is set, it is nearly impossible to lower the price without alienating early buyers.F) B) and D)
G) B) and E)

Question 10

A custom tailor wishes to use target profit pricing to establish a price for a custom designed business suit.Assume variable cost is $200 per suit, fixed cost is $44,000, and a target profit of $50,000 on a volume of 50 suits is desired.What price should be charged for a typical custom suit?

Accepted Answer

A)  $900.00
B)  $1,040.00
C)  $1,800.00
D)  $2,080.00
E)  $4,680.00F) A) and C)
G) None of the above

Question 11

Washburn Guitars broke their guitars into four distinct market segments.Each segment would be priced accordingly.Their one-of-kind custom instruments were intended to appeal to

Accepted Answer

A)  first-time buyers.
B)  professional musicians.
C)  stars and collectors.
D)  large institutional buys such as band programs.
E)  intermediate skill players who might (or might not)  become professional musicians.F) None of the above
G) A) and B)

Question 12

Fixed cost refers to

Accepted Answer

A)  the sum of the expenses of the firm that vary directly with the quantity of a product that is produced and sold.
B)  the expense incurred by a firm in producing and marketing a product.
C)  the sum of the expenses of the firm that are stable and do not change with the quantity of a product that is produced and sold.
D)  the average amount of money received for selling one unit of a product or simply the price of that unit.
E)  the sum of the expenses of the firm deducted from the revenue generated by the sale of the product.F) A) and B)
G) A) and C)

Question 13

Pricing constraints refer to

Accepted Answer

A)  the controllable elements in a firm's marketing mix that allow it to charge the highest price possible.
B)  formulas used in establishing break-even points, elasticity of demand, and marginal revenue figures.
C)  factors that limit the range of prices a firm may set.
D)  factors that enhance the range of prices a firm may set.
E)  fluid and often imaginary boundaries used when setting the initial price on a new product.F) D) and E)
G) C) and E)

Question 14

In one of its least favorite actions, Amazon.com was caught fiddling with its price tags.Avid videodisc buyers, buying in quantity for resale, found that the online store was offering different customers different prices for the same DVD, and complained vociferously.Amazon was caught red-handed.It was, company officials admitted, trying to see how much it could charge for an item before buyers balked.No matter what the reasoning behind it, Amazon.com was using

Accepted Answer

A)  horizontal price-fixing.
B)  resale price maintenance.
C)  price discrimination.
D)  predatory pricing.
E)  bait-and-switch pricing.F) All of the above
G) B) and E)

Question 15

The four major types of price discounts are

Accepted Answer

A)  quantity, trade-in, promotional, and cash.
B)  quantity, seasonal, trade (functional) , and cash.
C)  quantity, seasonal, promotional, and cash.
D)  cash, trade-in, seasonal, and promotional.
E)  trade-in, promotional, geographic, and functional.F) A) and E)
G) A) and D)

Question 16

Everyday low pricing refers to

Accepted Answer

A)  the pricing strategy of large no-frills stores, usually grocery stores, to maintain the lowest prices, even to the point of accepting competitors' coupons.
B)  the pricing strategy of starting a product at standard list price and lowering the price by a certain percentage until it is sold.
C)  the pricing strategy of starting a product with customary list pricing, lowering the price daily until it meets its break-even point, then removing the product from the shelves and selling it to resellers at cost.
D)  the practice of replacing promotional allowances with lower manufacturer list prices.
E)  a form of predatory pricing used solely for the purpose of harming the competition.F) A) and B)
G) A) and C)

Question 17

While consumer tastes and price and availability of similar products determine what consumers want to buy, consumer income determines

Accepted Answer

A)  where they buy.
B)  the degree of brand loyalty.
C)  the degree of repeat buys.
D)  what they can buy.
E)  their desire to buy.F) A) and B)
G) D) and E)

Question 18

To reduce the price sensitivity for some of its products, Washburn uses

Accepted Answer

A)  multiple suppliers for its raw materials.
B)  offering three months of free music lessons with the purchase of each guitar.
C)  endorsements by internationally known musicians who play their guitars and lend their names to lines of Washburn signature guitars.
D)  offering a lifetime unconditional warranty on all its instruments regardless of price.
E)  sponsoring free music programs and special Washburn guitar camps for children.F) C) and E)
G) D) and E)

Question 19

The owner of a carwash pays $2,500 in rent each month, $500 in utilities, $750 interest on his loan, an insurance premium of $200, and advertising on local bus of $250 a month.A full-service car wash is priced at $10.50.Unit variable costs for the carwash are $7.50.At what level of revenue will the carwash break-even?

Accepted Answer

A)  $4,200.00
B)  $12,600.00
C)  $14,700.00
D)  $29,925.00
E)  $39,900.00F) A) and B)
G) All of the above

Question 20

Large department stores chains such as Sears generally use _________ pricing.

Accepted Answer

A)  above
B)  at
C)  below
D)  prestige pricing
E)  skimming pricingF) All of the above
G) A) and D)

Exam 12: Pricing Products and Services

Correct Answer
verified

The executive vice president of Washburn Guitars has set a sales target of 2,000 units for a new line of guitars.This type of objective is most closely related to a(n) ________ pricing objective.

Correct Answer
verified

FIGURE 12-1 -Figure 12-1 above represents the four approaches for selecting an appropriate price level.Cubicle "A" represents which approach to finding the approximate price level according to the items listed in the cell?

Correct Answer
verified

Large department stores chains such as Sears generally use _________ pricing.

Correct Answer
verified

Price fixing is illegal under per se under the

Correct Answer
verified

A custom tailor wishes to use target profit pricing to establish a price for a custom designed business suit.Assume variable cost is $200 per suit, fixed cost is $44,000, and a target profit of $50,000 on a volume of 50 suits is desired.What price should be charged for a typical custom suit?

Correct Answer
verified

Setting a market price for a product or product class based on a subjective feel for the competitors' price or market price as the benchmark is referred to as

Correct Answer
verified

Correct Answer
verified

The Wm.Wrigley Jr.Co.recently introduced a new flavor of Orbit brand sugar free chewing gum - mint mojito.The introductory price was low so that it would create loyal customers for the flavor quickly.In this example, Wrigley is using

Correct Answer
verified

Fixed cost refers to

Correct Answer
verified

To reduce the price sensitivity for some of its products, Washburn uses

Correct Answer
verified

FIGURE 12-2 -What price policy does the Rock and Roll Hall of Fame (Figure 12-2 above) use to set prices?

Correct Answer
verified

While consumer tastes and price and availability of similar products determine what consumers want to buy, consumer income determines

Correct Answer
verified

FOB origin pricing refers to

Correct Answer
verified

The four major types of price discounts are

Correct Answer
verified

Pricing constraints refer to

Correct Answer
verified

While pricing objectives frequently reflect corporate goals, pricing constraints often relate to

Correct Answer
verified

Correct Answer
verified

Washburn Guitars broke their guitars into four distinct market segments.Each segment would be priced accordingly.Their one-of-kind custom instruments were intended to appeal to

Correct Answer
verified

Everyday low pricing refers to

Correct Answer
verified

Exam 12: Pricing Products and Services

Correct AnswerverifiedShow Answer

The executive vice president of Washburn Guitars has set a sales target of 2,000 units for a new line of guitars.This type of objective is most closely related to a(n) ________ pricing objective.

Correct AnswerverifiedShow Answer

FIGURE 12-1 -Figure 12-1 above represents the four approaches for selecting an appropriate price level.Cubicle "A" represents which approach to finding the approximate price level according to the items listed in the cell?

Correct AnswerverifiedShow Answer

Large department stores chains such as Sears generally use _________ pricing.

Correct AnswerverifiedShow Answer

Price fixing is illegal under per se under the

Correct AnswerverifiedShow Answer

A custom tailor wishes to use target profit pricing to establish a price for a custom designed business suit.Assume variable cost is $200 per suit, fixed cost is $44,000, and a target profit of $50,000 on a volume of 50 suits is desired.What price should be charged for a typical custom suit?

Correct AnswerverifiedShow Answer

Setting a market price for a product or product class based on a subjective feel for the competitors' price or market price as the benchmark is referred to as

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The Wm.Wrigley Jr.Co.recently introduced a new flavor of Orbit brand sugar free chewing gum - mint mojito.The introductory price was low so that it would create loyal customers for the flavor quickly.In this example, Wrigley is using

Correct AnswerverifiedShow Answer

Fixed cost refers to

Correct AnswerverifiedShow Answer

To reduce the price sensitivity for some of its products, Washburn uses

Correct AnswerverifiedShow Answer

FIGURE 12-2 -What price policy does the Rock and Roll Hall of Fame (Figure 12-2 above) use to set prices?

Correct AnswerverifiedShow Answer

While consumer tastes and price and availability of similar products determine what consumers want to buy, consumer income determines

Correct AnswerverifiedShow Answer

FOB origin pricing refers to

Correct AnswerverifiedShow Answer

The four major types of price discounts are

Correct AnswerverifiedShow Answer

Pricing constraints refer to

Correct AnswerverifiedShow Answer

While pricing objectives frequently reflect corporate goals, pricing constraints often relate to

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Washburn Guitars broke their guitars into four distinct market segments.Each segment would be priced accordingly.Their one-of-kind custom instruments were intended to appeal to

Correct AnswerverifiedShow Answer

Everyday low pricing refers to

Correct AnswerverifiedShow Answer

Correct Answer
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