Chapter 19 Flashcards
(135 cards)
1
Q
Price is best described as:
a. that which is given up in exchange to acquire a good or service
b. money exchanged for a good or service
c. the psychological results of purchasing
d. the cost in dollars for a good or service as set by the producer
e. the value of a barter good in an exchange
A
A
2
Q
At Wal-Mart, Randi saw a bag of daffodil flower bulbs and a box of plant fertilizer. The items, which
were sold together, retailed at $28.50, but were marked down to $19.99. The $19.99 is the:
a. Revenue
b. Price
c. Profit
d. liquidity value
e. amortized value
A
B
3
Q
All of the following statements about price are true EXCEPT:
a. Price can relate to anything with perceived value, not just money.
b. Price is that which is given up in an exchange to acquire a product.
c. Price means the same thing to the consumer and the seller.
d. The price paid is based on the satisfaction consumers expect to receive from a product.
e. Customers are interested in obtaining a perceived reasonable price.
A
C
4
Q
Which of the following statements about price is true?
a. Price and revenue are synonyms.
b. Price always equals some monetary figure.
c. Price is not necessarily based on the satisfaction consumers receive from a product.
d. High prices result in high profits.
e. All of these statements about price are true.
A
C.Price can relate to anything with perceived value, not just money. The price paid is based on the
satisfaction consumers expect to receive from a product, not necessarily what they actually receive.
5
Q
Revenue:
a. equals quantity sold times profit margin
b. equals price minus costs
c. equals return on investment
d. is synonymous with profit
e. equals price of goods times quantity sold
A
E
6
Q
_____ pay for every activity of the company.
a. Revenues
b. Investments
c. Retained earnings
d. Profits
e. Prices
A
A
7
Q
Money that is left over after paying for company activities is called:
a. return on investment
b. a contribution margin
c. Profit
d. net worth
e. a current asset
A
C
8
Q
What is perceived value defined as in an exchange?
a) The price paid
b) The benefit received
c) The difference between the price paid and benefit received
d) The satisfaction of the buyer
A
C
9
Q
What equation represents profits in business?
a) Profits = Revenue + Costs
b) Profits = Revenue - Costs
c) Profits = Costs - Revenue
d) Profits = Revenue / Costs
A
B
10
Q
To earn a profit, what condition must the price meet concerning the perceived value to target customers and costs?
a) Price must be equal to perceived value and costs combined.
b) Price must be greater than perceived value and costs combined.
c) Price must be less than perceived value but greater than costs.
d) Price must be greater than perceived value but less than costs.
A
C
11
Q
Why are marketing managers finding it more difficult to set prices in today’s environment?
a. Inflationary and recessionary periods have made customers less price-sensitive.
b. Fewer dealer and generic brands are available because the competition has been
eliminated.
c. The high rate of new-product introductions has led to careful reevaluation by consumers.
d. Marketing managers are finding it difficult to compare prices between suppliers.
e. Buyers are less informed and are less price-sensitive.
A
C
12
Q
For convenience, pricing objectives can be divided into three categories. They are:
a. refundable, competitive, and attainable
b. perceived, actual, and unique-situational
c. differentiated, niche, and undifferentiated
d. profit oriented, sales oriented, and status quo
e. monopolistic, fixed, and variable
A
D
13
Q
Which of the following best defines variable costs?
a) Costs that remain constant regardless of output level
b) Costs that fluctuate with changes in the level of output
c) Costs associated with equipment and rent
d) Costs that do not change as the level of output changes
A
B
14
Q
What are examples of variable costs?
a) Equipment and rent
b) Executive salaries
c) Labor and materials
d) Administrative expenses
A
c
15
Q
Fixed costs are characterized by:
a) Fluctuations with changes in the level of output
b) Remaining constant regardless of output level
c) Being directly proportional to the level of output
d) Being unrelated to production activities
A
B
16
Q
What function do costs serve in pricing?
a) Costs provide a price ceiling
b) Costs set the market price
c) Costs establish a price floor
d) Costs determine the demand
A
C
17
Q
The two types of costs a marketer needs to consider when setting prices are:
a. primary and secondary
b. variable and fixed
c. marginal and absolute
d. short-term and long-term
e. elastic and inelastic
A
B
18
Q
For a nail salon, the costs associated with the purchase of nail polish and other products like nail polish
remover, sterilized equipment, laundry service for the towels, and the beverages given to customers,
are all examples of _____ costs.
a. Marginal
b. Variable
c. Fixed
d. Promotional
e. Liquidity
A
B
19
Q
Mitch owns a pet boarding kennel. The monthly payment on the land he purchased for his kennel, the
mortgage on his small office building, and his business license are all examples of _____ costs.
a. Marginal
b. Variable
c. Fixed
d. Promotional
e. Demand
A
C
20
Q
Which of the following is most likely to be a variable cost for an Internet retailer that sells spices,
herbs, and seasonings to consumers?
a. annual lease on mixer used to blend seasonings
b. executive salaries
c. rent for building where spices and herbs are repackaged for consumers
d. workers’ insurance
e. postage for shipping spices and herbs
A
E
21
Q
Fixed cost contribution equals:
a. price times the average fixed cost
b. price plus the average variable cost
c. average variable cost plus average fixed cost
d. break-even quantity times price
e. price minus the average variable cost
A
E
22
Q
What is the primary reason for cost reduction with increasing output in economies of scale?
a) Decreasing variable costs per unit
b) Decreasing fixed costs per unit
c) Increasing total costs per unit
d) Increasing variable costs per unit
A
B
23
Q
What does marginal cost represent in production?
a) The total cost of production
b) The cost of producing the first unit
c) The cost of producing an additional unit
d) The fixed costs of production
A
C
24
Q
What does marginal revenue represent in sales?
a) The total revenue from all units sold
b) The revenue from selling the first unit
c) The revenue from selling an additional unit
d) The fixed revenue from sales
A
C
25
In what situation might prices be set below total costs during a recession?
a) In times of economic boom
b) In times of economic stability
c) In times of economic downturn
d) In times of economic expansion
C
26
Why are fixed costs considered unavoidable regardless of sales volume?
a) Because fixed costs fluctuate with sales volume
b) Because fixed costs are independent of sales volume
c) Because fixed costs decrease with sales volume
d) Because fixed costs increase with sales volume
B
27
How does setting prices below total costs during a recession affect profitability?
a) It increases profitability
b) It maintains profitability
c) It decreases profitability
d) It has no impact on profitability
C
28
What is contribution margin?
a) The difference between total revenue and total cost
b) The difference between price and variable cost
c) The difference between fixed cost and variable cost
d) The difference between total cost and variable cost
b
29
What does contribution margin represent in terms of each unit sold?
a) The total profit
b) The total revenue
c) The portion of revenue available to cover fixed costs
d) The portion of revenue available as profit
C
30
What do Cost-Volume-Profit (CVP) charts illustrate?
a) Only sales revenue
b) Only costs
c) Sales, costs, and profits/losses for different levels of units sold
d) Only profits
C
31
At the breakeven point on a CVP chart, what relationship exists between total costs and total sales revenue?
a) Total costs are greater than total sales revenue
b) Total costs are less than total sales revenue
c) Total costs equal total sales revenue
d) Total costs and total sales revenue are irrelevant at the breakeven point
C
32
What term is used to describe the difference between selling price per unit and variable cost per unit?
a) Fixed costs
b) Contribution margin
c) Total costs
d) Total revenue
B
33
An organization is using _____ when it sets its prices so that total revenue is as large as possible
relative to total costs.
a. profit maximization
b. market share pricing
c. demand-oriented pricing
d. sales maximization
e. status quo pricing
A
34
When Apple Inc. originally introduced its iPhone it was priced at what many believed to be about as
high as the market would allow. Within weeks Apple lowered the price of the iPhone. It appears that
Apple Inc. entered the market with a _____ approach to pricing the iPhone.
a. market share pricing
b. profit maximization
c. demand-oriented
d. sales maximization
e. status quo pricing
B
35
When Insight Research Associates quotes a marketing research project management will first estimate
the cost to conduct the research and produce and deliver the final client report. The next step in
determining the price is to add 30% to that cost estimate. This becomes the price estimate given to the
potential research client. This suggests that Insight Research Associates uses a(n) _____ pricing
objective.
a. profit-oriented
b. market share maximization
c. status quo
d. sales maximization
e. supply-demand equalization
A. Targeted ROI
36
Thompson Pool is known for quality pool installations, excellent customer service, and reasonable
prices. If you want to have a Thompson pool you will have to wait about six months due to demand for
their product. While Thompson could probably price their product higher, given the demand, they
don’t. Instead, they set price so that they earn a reasonable level of profits. This company seems to
base its pricing policy on:
a. profit maximization
b. earning satisfactory profits
c. creating retained earnings
d. making the most money as possible
e. decreasing consumer demand
B
37
_____ is equal to net profit after taxes divided by total investment
a. Return on investment
b. Economic order quantity
c. Target-on-sales
d. Retained earnings
e. Efficiency maximization
A
38
Sherrie is seven years old and wants to open a lemonade stand in her neighborhood. She is having a
tough time deciding whether to base her pricing objectives on market share, dollar sales, or unit sales.
Regardless of which she chooses, her pricing objective can be categorized as:
a. status quo
b. profit oriented
c. need oriented
d. cost oriented
e. sales oriented
E
39
At a price of $1,192,057, the Bugatti Veyron may be the most expensive street legal car currently on
the market today. Obviously, Bugatti is NOT using a _____ pricing objective in setting the price for
this car.
a. inelastic or supply-oriented
b. market share or sales maximization
c. profit maximization or target return on investment
d. status quo or satisfactory profits
e. demand-oriented or supply-oriented
B
40
. A company using market share pricing has a _____ pricing objective.
a. profit-oriented
b. sales-oriented
c. demand-oriented
d. supply-oriented
e. status quo
B
41
_____ is a company’s product sales as a percentage of total sales for that industry.
a. Return on investment
b. Profit share
c. Revenue share
d. Market share
e. Contribution
D
42
At the end of the summer, Howard Nursery reduced the price on all of its plants, fertilizer, and potting
soil by 50 percent in order to liquidate this inventory. What type of pricing strategy is being used in
this example?
a. supply oriented
b. sales maximization
c. target return on investment
d. satisfactory profit
e. profit maximization
B
43
Dixie Furniture Company has recently moved to a new, larger location. At this new location, it has
been unable to attract sufficient customers. Its owner does not have the cash to pay the current loan
installment due on the building and inventory so he decided to reduce all merchandise prices by at
least 50 percent for a weekend sale to earn enough to make his loan payment. His pricing objective can
be classified as:
a. market share maximization
b. satisfactory profits
c. asset maximization
d. sales maximization
e. target ROI
D
44
As a short-term pricing objective, _____ can be effectively used on a temporary basis to sell off
excessive inventory.
a. profit maximization
b. profit-oriented pricing
c. status quo pricing
d. sales maximization
e. market share pricing
D
45
If a company's pricing objective is to meet the competition or to maintain existing prices, it is using
_____ pricing.
a. head-on
b. target return on investment
c. status quo
d. market share
e. demand-oriented
C
46
When Delta Airlines raises or lowers its prices on its Atlanta to Chicago route other airlines tend to
make the same changes in their pricing. This is an example of _____ pricing.
a. status quo
b. target return
c. market share
d. Predatory
e. cost-plus
A
47
Which of the following statements describes an advantage of status quo pricing?
a. Status quo pricing is derived from actual costs of manufacturing.
b. Status quo pricing maintains the organization's differential advantage.
c. Status quo pricing is active, not reactive.
d. Status quo pricing causes price wars.
e. Status quo pricing requires little planning.
E
48
Which pricing objective involves setting prices to maximize profits in the long run?
a) Profit-oriented pricing
b) Profit maximization
c) Breakeven pricing
d) Targeted return on investment
B
49
What does profit maximization entail in terms of setting prices?
a) Increasing revenue only
b) Decreasing costs only
c) Maximizing profits by either increasing revenue or decreasing costs
d) Balancing revenue and costs
C
50
What is the potential drawback of setting high prices for profit maximization?
a) Decreased demand
b) Increased demand
c) Decreased profits per unit
d) Increased profits per unit
A
51
What is the primary focus of breakeven pricing?
a) Maximizing profits
b) Minimizing costs
c) Achieving a targeted return on investment
d) Strategizing around the breakeven point
D
52
What is the goal of targeted return on investment pricing?
a) Maximizing profits
b) Achieving a certain return on investment (ROI)
c) Minimizing costs
d) Increasing revenue
B
53
What is the primary characteristic of markup pricing?
a) Setting prices based on competitors' prices
b) Adding a markup on costs to determine selling price
c) Setting prices to maximize profits
d) Setting prices to cover variable costs
B
54
What is the primary focus of sales-oriented pricing?
a) Maximizing profits
b) Maximizing revenue, units sold, or market share
c) Minimizing costs
d) Matching competitors' prices
B
55
What is the goal of market share maximization?
a) Minimizing costs
b) Maximizing short-term profits
c) Maximizing long-term sales
d) Reducing competition
C
56
How do higher sales contribute to the effectiveness of sales-oriented pricing?
a) They decrease economies of scale
b) They lower cost competitiveness
c) They enhance economies of scale and cost competitiveness
d) They have no impact on cost competitiveness
c
57
Which pricing strategy is most aligned with marketing philosophy?
a) Sales-oriented pricing
b) Market share maximization
c) Status quo pricing
d) Value-based pricing
D
58
How is the final price determined in value-based pricing?
a) Based on internal costs
b) Based on competitors' prices
c) Based on customer perceptions of fair value
d) Based on historical pricing data
C
59
Although many factors can influence price, the primary determinants are:
a. costs of manufacturing and distribution
b. the demand for the good and the cost to the seller
c. demand by the consumer and perceived quality
d. distribution and promotion strategies
e. stage of the product life cycle and costs to the consumer
B
60
What is a potential drawback of status quo pricing?
a) It is difficult to implement
b) It may not explicitly consider sales or profit objectives
c) It is not aligned with marketing philosophy
d) It does not consider competitors' prices
B
61
The _____ is the quantity of a product that will be sold in the market at various prices for a specified
time period, and _____ is the quantity of a product that will be offered to the market by suppliers at
various prices for a specified period.
a. demand; equity
b. demand; supply
c. supply; demand
d. inventory; demand
e. inventory; supply
B
62
The _____ is the quantity of a product that will be sold in the market at various prices for a specified
time period, and _____ is the quantity of a product that will be offered to the market by suppliers at
various prices for a specified period.
a. demand; equity
b. demand; supply
c. supply; demand
d. inventory; demand
e. inventory; supply
b
63
Consumers’ responsiveness or sensitivity to changes in prices is known as:
a. break-even
b. equilibrium
c. unitary revenue
d. asymmetrical demand
e. elasticity of demand
e
64
When consumers are sensitive to price changes, _____ occurs.
a. inelastic demand
b. elastic supply
c. elastic demand
d. inelastic supply
e. unitary elasticity
c
65
While the sales of the Apple iPhone have been great from the beginning, when Apple released its
iPhone 3G cut the price of the iPhone for $399 to $199 sales exploded with one million iPhones sold
the first weekend. Demand for the iPhone appears to be _____.
a. unitary
b. predictable
c. synergistic
d. inelastic
e. elastic
e
66
What happens when demand is elastic?
a. As price goes up, revenue goes down.
b. As price goes down, revenue goes down.
c. As price goes up, revenue goes up.
d. As price goes up, revenue does not change.
e. As price goes down, revenue does not change.
A
67
Procter & Gamble dropped the price of Pringles Potato Chips in the Southeast due to price competition
and consumer demand. As a result of the price reduction, Procter & Gamble increased unit sales and
earnings by 10 percent due to:
a. reduction in supply
b. increases in both supply and demand
c. demand being elastic
d. demand being inelastic
e. market share fluctuations
C
68
When price decreases and total revenue falls, demand is:
a. Elastic
b. Inelastic
c. Absolute
d. Unitary
e. Stable
B
69
When the NES Group lowered the price of its professional-grade meat slicers from $2,300 to $1,600,
demand doubled from 4 units sold per month to 8 units per month. However, total revenue dropped.
This is an example of:
a. substitute goods
b. unitary elasticity
c. elastic demand
d. consumer shortage
e. inelastic demand
E
70
Critics claim bank ATMs take advantage of the _____ of customers who suffer a poverty of time and
have a strong need for convenience.
a. elasticity of demand
b. inelastic demand schedule
c. unitary supply and demand
d. ROI characteristics
e. supply characteristics
B
71
All of the following factors directly affect the elasticity of demand EXCEPT:
a. other uses of a product
b. inputs needed to manufacture the product
c. availability of substitute goods
d. price relative to a consumer's purchasing power
e. product durability
B
72
0. Which of the following would imply demand would be elastic?
a. price is low relative to purchasing power
b. nondurable product
c. low inflation rate
d. many substitute products
e. all of these choices
D
73
The greater the number of different uses for a product, the more _____ demand tends to be.
a. Elastic
b. Inelastic
c. Unitary
d. Volatile
e. Stable
A
74
If a product has high pricing power this would indicate a situation of:
a. unitary demand
b. inelastic demand
c. elastic demand
d. constant demand
e. revenue maximization
B
75
What is unitary elasticity?
a) When the demand for a product is perfectly inelastic
b) When the demand for a product is perfectly elastic
c) When the percentage change in quantity demanded is exactly equal to the percentage change in price
d) When the demand for a product does not change with changes in price
C
76
David likes New Balance running shoes. However, when he stopped by the Foot Locker to buy a new
pair of running shoes he noticed that Nike had a new pair of running shoes that cost $350. To David
the higher price of the Nike shoe indicated that it would be a better pair of running shoes. This is an
example of _____.
a. premium pricing
b. price lining
c. prestige pricing
d. exclusive pricing
e. selective pricing
C
77
When the Apple iPhone 3G was introduced the Apple iTunes web site also began selling small
program “apps” written by third parties that could be run on the iPhone. One interesting app was the “I
Am Rich” application. For a price of $1,000 you could buy this app that did nothing but display a red
gem on the iPhone’s screen. The description of the app stated that this red icon would remind you (and
others you show it to) “that you were rich enough to afford this.” Six of the applications were sold
before Apple Inc. removed the app from iTunes. At the $1,000 price the author of the app was using
_____ pricing as part of his marketing approach.
a. snob appeal
b. Prestige
c. exclusive
d. selective
e. Unique
B
78
Marketing managers who attempt to raise the quality image of their product by selling it at high prices
are following a(n) _____ strategy.
a. profit maximization
b. market share
c. maintained markup pricing
d. prestige pricing (uy tin)
e. investment asset
D
79
Prestige pricing:
a. equalizes supply and demand
b. uses high prices to promote a high-quality product
c. is the practice of marking up prices by 100 percent
d. is also called leader pricing
e. emphasizes the monetary nature of price
B
80
Laurie knows little about cooking and does not want to spend the time to learn how to make a quiche.
However, she has been asked to bring a quiche to an office retirement party. Not wanting to make a
poor choice, she is likely to:
a. intuitively make the right choice
b. avoid making a decision by not attending the party
c. buy the most expensive pre-made quiche (perhaps paying too much), guessing that the
price is related to quality
d. research the product and buy the least expensive frozen quiche she can find
e. buy the least expensive frozen quiche because most consumers feel that price is not
directly related to quality
C
81
What effect does product evaluation difficulty have on price elasticity?
a) It increases price elasticity
b) It decreases price elasticity
c) It has no effect on price elasticity
d) It makes price elasticity unpredictable
B
82
What factor distinguishes Giffen goods from normal goods?
a) Demand decreases as income increases
b) Demand increases as income increases
c) Demand increases as the price decreases
d) Demand decreases as the price decreases
A
83
What is a defining characteristic of a pure monopoly?
a) Multiple sellers
b) Only one seller
c) Limited government intervention
d) Unrestricted competition
B
84
How does pricing work in a pure monopoly market structure?
a) Prices are set competitively
b) Prices are heavily influenced by consumer demand
c) The seller can charge any price
d) Prices are controlled by government regulations
C
85
Which example best represents a pure monopoly market structure?
a) Local farmer's market
b) Government-sanctioned utility company
c) Shopping mall with multiple stores
d) Online marketplace with various sellers
B
86
Why are monopolies generally not permitted?
a) They benefit consumers
b) They encourage competition
c) They have adverse effects on consumers
d) They promote innovation
C
87
What characterizes an oligopoly market structure?
a) Many sellers with differentiated products
b) A few sellers with undifferentiated products
c) One seller with a unique product
d) Many sellers with unique products
B
88
What is the primary focus of firms in an oligopoly market?
a) Customer preferences
b) Competitor moves
c) Government regulations
d) Internal operations
B
89
What makes oligopoly markets ripe for price fixing or collusion?
a) High consumer demand
b) Low production costs
c) A few dominant sellers
d) Government intervention
C
90
Which industry is commonly cited as an example of an oligopoly market?
a) Local farmer's market
b) Grocery stores
c) Airlines
d) Street vendors
C
91
What characterizes a monopolistic competition market structure?
a) Many sellers with identical products
b) Few sellers with identical products
c) Many sellers with differentiated products
d) One seller with a unique product
C
92
What type of products do companies typically sell in monopolistic competition?
a) Identical or undifferentiated
b) Highly specialized or niche
c) Differentiated
d) Commodities
C
93
What characterizes a pure competition market structure?
a) Many buyers and sellers with little to no product differentiation
b) Few buyers and sellers with highly differentiated products
c) One buyer and one seller with identical products
d) No buyers and sellers
A
94
How is pricing determined in pure competition?
a) By government regulations
b) By sellers based on their costs
c) By the intersection of supply and demand curves
d) By sellers through collusion with competitors
C
95
What level of control do sellers have over prices in pure competition?
a) Complete control
b) Limited control
c) No control
d) Partial control
C
96
What is the primary characteristic of skimming pricing?
a) Setting prices based on competitors' prices
b) Gradually increasing prices over time
c) Initially setting a high price that is gradually lowered over time
d) Setting prices based on production costs
C
97
What type of products is skimming pricing suitable for?
a) Low-priced consumables
b) High-priced durables
c) Niche market products
d) Bulk commodities
B
98
What is the primary objective of skimming pricing?
a) Maximizing market share
b) Capturing maximum value from early adopters
c) Matching competitors' prices
d) Minimizing production costs
B
99
What is the primary characteristic of penetration pricing?
a) Setting prices based on competitors' prices
b) Gradually increasing prices over time
c) Initially setting a low price to induce trial
d) Initially setting a high price to capture maximum value
C
100
What type of products is penetration pricing more appropriate for?
a) High-priced luxury items
b) One-time purchase products
c) Repeat purchase items
d) Niche market products
C
101
What is the main objective of penetration pricing?
a) Maximizing short-term profits
b) Capturing maximum value from early adopters
c) Encouraging more consumers to purchase the product
d) Matching competitors' prices
C
102
How does penetration pricing affect unit profits initially?
a) They remain constant over time
b) They increase gradually over time
c) They decrease initially
d) They increase initially
c
103
What is the expected outcome of penetration pricing in the long run?
a) Lower overall profits
b) Increased market share and repurchase rates
c) Reduced economies of scale
d) Higher production costs
b
104
In which industry is penetration pricing commonly employed?
a) Automobile manufacturing
b) Real estate
c) Packaged food products
d) Luxury fashion
c
105
What is the primary purpose of discounts in price modification strategies?
a) To permanently change the base price
b) To adjust prices without changing the base price
c) To increase production costs
d) To decrease customer loyalty
B
106
In what situations are discounts commonly used as a price modification strategy?
a) When aiming to permanently lower prices
b) When trying to maintain consistent pricing
c) When selling excess inventory or introducing new products
d) When targeting a single market segment
C
107
What is the primary purpose of quantity discounts?
a) To encourage prompt payment
b) To stimulate larger orders
c) To clear unsold inventory
d) To provide incentives for promotional activities
B
108
What type of accounts are cash discounts commonly associated with?
a) Retail customers
b) B2B (Business-to-Business) accounts
c) Students
d) Senior citizens
B
109
When are seasonal discounts typically used?
a) To promote prompt payment
b) To stimulate larger orders
c) To create buzz or clear unsold inventory
d) To provide incentives for promotional activities
C
110
What is the purpose of a promotional (or trade) allowance?
a) To stimulate larger orders
b) To encourage prompt payment
c) To provide incentives for promotional activities in stores
d) To create buzz or clear unsold inventory
C
111
What incentive do manufacturers provide through promotional allowances?
a) Discounts for prompt payment
b) Cash back after purchase
c) Better shelf placement and featured in-store ads
d) Dynamic pricing based on demand
C
112
What type of discount involves providing money back after purchase?
a) Quantity discounts
b) Cash discounts
c) Seasonal discounts
d) Rebates
D
113
How can rebates be redeemed?
a) Instantly in-store
b) Through digital means
c) Both by mail-in and digital submission
d) All of the above
C
114
What is dynamic pricing primarily used for?
a) Stimulating larger orders
b) Encouraging prompt payment
c) Lowering prices during off-peak hours
d) Providing discounts for certain groups
C
115
Which groups commonly receive reduced rates through dynamic pricing?
a) B2B accounts
b) Students, senior citizens, and military personnel
c) Retail customers
d) Manufacturers
B
116
What is one purpose of providing rebates through mail-in or digital submission?
a) To stimulate larger orders
b) To collect buyer data
c) To create buzz
d) To provide incentives for promotional activities
B
117
When is geographic pricing particularly important?
a) When shipping costs are negligible
b) When production costs are high
c) When marketing costs are high
d) When shipping costs are a large component of total costs
D
118
What does FOB pricing entail?
a) The price includes shipping costs
b) The price does not include shipping costs
c) The price varies based on the customer's location
d) The price is set uniformly for all customers
B
119
What is the primary advantage of uniform delivered pricing?
a) It allows for flexible pricing strategies
b) It simplifies marketing campaigns
c) It reduces production costs
d) It increases customer loyalty
B
120
What is one characteristic of zonal pricing?
a) It sets the same delivery prices for all regions
b) It divides the market into regions and sets different delivery prices for each region
c) It covers shipping costs for all customers
d) It excludes shipping costs from the total price
b
121
How does uniform delivered pricing simplify marketing campaigns?
a) By offering discounts to certain regions
b) By setting different prices for different customers
c) By ensuring that all customers pay the same total price
d) By excluding shipping costs from the total price
c
122
What is the primary purpose of loss leader pricing?
a) To maximize short-term profits
b) To minimize customer traffic in stores
c) To stimulate demand for higher margin products
d) To increase prices for all products
C
123
How does loss leader pricing typically affect the profitability of the promoted product?
a) It increases profitability
b) It decreases profitability
c) It has no effect on profitability
d) It maximizes customer satisfaction
C
124
What pricing strategy is exemplified by selling a product for $9.99 instead of $10?
a) Two-part pricing
b) Price bundling
c) Versioning
d) Psychological pricing
D
125
What is the primary objective of two-part pricing?
a) To decrease customer satisfaction
b) To simplify pricing strategies
c) To maximize short-term profits
d) To charge two separate fees for essentially one product or service
D
126
Which example best illustrates two-part pricing?
a) Selling razors and blades separately
b) Offering combo meals at a restaurant
c) Selling multiple items in a bundle
d) Creating multiple versions of the product
A
127
What is the purpose of price bundling?
a) To reduce transaction value
b) To decrease customer satisfaction
c) To simplify pricing structures
d) To increase total transaction value
D
128
What is the primary benefit of versioning?
a) Decreasing customer satisfaction
b) Increasing production costs
c) Catering to the needs of different target markets
d) Simplifying pricing structures
c
129
What example illustrates versioning?
a) Selling fewer features for a lower cost
b) Offering combo meals at fast-food restaurants
c) Using psychological pricing techniques
d) Setting prices based on competitors' prices
a
130
What is price fixing?
a) Setting prices based on production costs
b) Collaborating with competitors to set prices and avoid price-based competition
c) Adjusting prices to match competitors' prices
d) Offering discounts to certain customers
B
131
Why is price fixing generally illegal under antitrust laws?
a) Because it maximizes competition
b) Because it minimizes competition
c) Because it increases consumer choices
d) Because it reduces production costs
B
132
When is price discrimination considered legal?
a) When it unfairly benefits certain businesses
b) When it discriminates based on non-business factors
c) When there is a legitimate business reason, such as lower costs to service certain customers
d) When it aims to kill competition
C
133
What could be a legitimate business reason for price discrimination?
a) Discrimination based on non-business factors
b) Discrimination to unfairly benefit certain businesses
c) Lower costs to service certain customers, such as offering volume discounts or different service levels
d) Discrimination to match competitors' prices
C
134
When does price discrimination become illegal?
a) When there is a legitimate business reason
b) When it unfairly benefits certain businesses
c) When it discriminates based on non-business factors
d) When it aims to maximize competitio
B
135
What is predatory pricing?
a) Setting prices to maximize competition
b) Setting prices to kill competition and raise prices later
c) Offering discounts to all customers
d) Adjusting prices to match competitors' prices
b
