question

33. Price is best described as:

answer

that which is given up in exchange to acquire a good or service

question

At Walmart, Randi saw a bag of daffodil flower bulbs... 19.99 is the

answer

price

question

35. Which of the following statements is NOT true about price?

answer

Price means the same thing to the consumer and the seller.

question

36. When goods and services are exchanged, the trade is called:

answer

barter

question

37. Revenue:

answer

equals price of goods times quantity sold

question

_____ pay for every activity of the company.

answer

Revenues

question

39. Money that is left over after paying for company activities is called:

answer

profit

question

At Walmart, Randi saw a bag of daffodil flower bulbs... Sold one at 28.50 and five at 19.99. The retailers revenue is

answer

128.45

question

41. Which of the following is not a real trend that has affected the consumer market?

answer

Many firms are trying to maintain or regain their market share by raising prices.

question

42. For convenience, pricing objectives can be divided into three categories. They are:

answer

profit oriented, sales oriented, and status quo

question

43. An organization is using ______ when it sets its prices so that total revenue is as large as possible relative to total costs.

answer

profit maximization

question

44. 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 entered the market with a____approach to pricing the iPhone.

answer

profit maximization

question

45. 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 percent 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.

answer

profit-oriented

question

46. Thompson Pool and Patio 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 its product higher, given the demand, they don't. Instead, the company sets its price so that it will earn a reasonable level of profits. Thompson seems to base its pricing policy on:

answer

earning satisfactory profits.

question

47. ____ is equal to net profit after taxes divided by total assets.

answer

Return on investment

question

What was the actual ROI for Peirre's Ice Cream Company?

answer

10 percent

question

49. Britney is fifteen years old and wants to open her own business selling cupcakes to local coffee shops and restaurants. 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:

answer

sales oriented.

question

50. A company using market share pricing has a____pricing objective.

answer

sales-oriented

question

51. ____is a company's product sales as a percentage of total sales for that industry.

answer

Market share

question

52. At a price of $1,192,057, the Bugatti Veyron may be the most expensive street-legal car on the market today. Obviously, Bugatti is NOT using a(n)_____pricing objective in setting the price for this car.

answer

market share or sales maximization

question

53. At the end of the summer, the Bloomin' Garden Center 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?

answer

Sales maximization

question

54. 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 did 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:

answer

sales maximization.

question

55. As a short-term pricing objective, ____ can be effectively used on a temporary basis to sell off excessive inventory.

answer

sales maximization

question

56. If a company's pricing objective is to meet the competition or to maintain existing prices, it is using pricing.

answer

status quo

question

57. When the local Shell station raises or lowers its prices on its gasoline, the Marathon station across the street makes the same changes in its pricing. This is an example of____pricing.

answer

status quo

question

58. Which of the following statements describes an advantage of status quo pricing?

answer

Status quo pricing requires little planning.

question

59. Although many factors can influence price, the primary determinants are:

answer

the demand for the good and the cost to the seller

question

60. The quantity of a product that will be sold in the market at various prices for a specified period is called:

answer

demand.

question

61. The price of the good or service is a key decision for a marketer because it most significantly and directly affects the product's:

answer

demand.

question

62. Most demand curves slope:

answer

downward and to the right

question

63. Peggy's Twist Shack sells softserve ice cream. Peggy graphed the demand per week for vanilla ice cream cones. The graph indicates a demand schedule that slopes downward and to the right. This graph indicates that the quantity of vanilla ice cream cones demanded increases as:

answer

price decreases.

question

64. The ____ is the quantity of a product that will be sold in the market at various prices for a specified period, and ____ is the quantity of a product that will be offered to the market by suppliers at various prices for a specified period.

answer

demand; supply

question

65. ____ is the quantity of a product that will be offered to the market at various prices for a specified period.

answer

Supply

question

66. When the price of a product is set at a level where demand and supply are the same, price ____ has been achieved.

answer

equilibrium

question

67. At a price of $6,000, only 191 of the Moulton 60 model bicycle are being made. If Moulton sells each one of the bicycles at that price, then a state of has been achieved.

answer

price equilibrium

question

68. Bottles of Pure Hawaiian Air contain air that smells like the floral bouquet that greets tourists as they get off the plane in Hawaii. When a tourist shop began selling Pure Hawaiian Air, it charged $5 per bottle and could not keep up with the demand. It has since raised the price to $7. Now the shop is still selling all the bottles of Pure Hawaiian Air it carries, but the owner is not forced to reorder on a daily basis. The $7 price is probably a(n):

answer

price equilibrium.

question

69. Consumers' responsiveness or sensitivity to changes in price is known as:

answer

elasticity of demand.

question

70. When consumers are sensitive to price changes, ____occurs.

answer

elastic demand

question

71. While the sales of the Apple iPhone have been great from the beginning, when Apple released its iPhone 4S and cut the price of the iPhone 4 from $399 to $199, sales exploded with one million iPhone 4 models sold the first weekend. Demand for the iPhone appears to be:

answer

elastic.

question

72. What happens when demand is elastic?

answer

As price goes up, revenue goes down.

question

73. If price____and revenue ____, demand is elastic.

answer

goes down; goes up

question

74. ____occurs when an increase in sales exactly offsets a decrease in price so that total revenue remains exactly the same.

answer

Unitary elasticity

question

75. When price decreases and total revenue falls, demand is:

answer

inelastic.

question

76. If price goes up or down and revenue stays the same:

answer

elasticity is unitary.

question

77. When the NES Group lowered the price of its professional-grade meat slicers from $2,300 to $1,125, demand doubled from four units sold per month to eight units per month. However, total revenue dropped. This is an example of:

answer

inelastic demand

question

78. When Nesco brand food hydrators sold for $59.99, Nesco sold 90 dehydrators. When the company dropped the price of its dehydrators to $44.95, it sold 145 dehydrators. Demand for the food dehydrators appears to be:

answer

elastic.

question

79. Demand for which of the following products or services is most likely inelastic?

answer

Wheat bread

question

80. All of the following factors directly affect the elasticity of demand EXCEPT:

answer

inputs needed to manufacture the product.

question

81. Which of the following would imply elastic demand?

answer

Many substitute products

question

82. The greater the number of different uses for a product, the more____demand tends to be.

answer

elastic

question

83. What does "YMS" stands for?

answer

Yield management systems.

question

84. Yield management systems were first developed by which industry?

answer

The airline industry.

question

85. Yield management systems are used to:

answer

profitably fill unused capacity

question

86. ____use complex mathematical software to profitably fill unused capacity.

answer

Yield management systems

question

87. Allstate has more than 1,500 price levels determined by complex algorithms that analyze 16 credit report variables, including late payments and card balances. Allstate is using a _____to set prices.

answer

yield management system

question

88. Which of the following statements about yield management systems (YMS) is true?

answer

YMS are mathematically complex systems to make use of underutilized capacity and reduce the cost of perishability.

question

89. Chad has calculated the sales volume at which his lemonade stand's costs equal revenue. Over dinner, he announced to his family that he only needed to sell 50 glasses of lemonade at $5 per glass to cover all his costs (such as lumber and nails for the stand, lemons, and sugar). Which important factor has Chad excluded from his analysis?

answer

Consumer demand

question

90. Total variable costs divided by quantity of output equals:

answer

average variable cost

question

91. The two types of costs a marketer needs to consider when setting prices are:

answer

variable and fixed.

question

92. A cost that changes with the level of output is called a(n) cost.

answer

variable

question

93. Which of the following is most likely to be a variable cost for an Internet retailer that sells spices, herbs, and seasonings to consumers?

answer

Postage for shipping spices and herbs

question

94. 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.

answer

variable

question

95. _____costs do not change as output is increased or decreased.

answer

Fixed

question

96. Central Bark is a dog resort where pets are pampered. Which of the following is the BEST example of one of its fixed costs?

answer

Payment on the building used by Central Bark

question

97. Mitch owns an accounting agency. The monthly payment on the land he purchased for his business, the mortgage on his small office building, and his business license are all examples of _____costs.

answer

fixed

question

98. ______cost is the change in total costs associated with a one-unit change in output.

answer

Marginal

question

99. Monthly output at Leisure-Time, Inc. changed from 12 to 13 prefabricated gazebos, and the total costs changed from $9,000 to $10,500. What is the marginal cost for this company?

answer

$1,500

question

100. When a seller determines the selling price by adding to cost an amount for profit and expenses not previously accounted for, the seller is using_____pricing.

answer

markup

question

101. The most popular method used by wholesalers and retailers in establishing a sales price is____pricing.

answer

markup

question

102. Cowboy Malone's Electric City pays a wholesaler $700 for a television and sells it to a customer for $1,500. The markup on the television is:

answer

$800

question

103. An office supply store can buy a desk for $300. If the store owner sells the desk for $450, what is the markup based on cost?

answer

50 percent

question

104. An office supply store can buy a desk for $300. If the store owner sells the desk for $450, what is the markup based on the selling price?

answer

33 percent

question

105. The difference between the retailer's cost and the selling price is the:

answer

gross margin.

question

106. The owner of specialty kitchen retail store wants to determine what price she should put on a set of mixing bowls. They cost her $7. She desires a markup of 30 percent based on selling price. Which of the following is closest to the price she should charge her customers?

answer

$10

question

107. _____is the practice of marking up prices by 100 percent (or doubling the cost to set the selling price).

answer

Keystoning

question

108. Keystoning is:

answer

the practice of marking up prices by 100 percent.

question

109. The Nest is a retail store owned and operated by an interior designer. The markup on all items in the store is 100 percent over cost (or double the cost). In this case, we would say the designer uses:

answer

keystoning.

question

110. Profit maximization occurs when:

answer

marginal revenue equals marginal cost.

question

111. ____is the extra revenue associated with selling an additional unit of output.

answer

Marginal revenue

question

112. As long as the revenue of the last unit produced and sold is greater than the cost of the last unit produced and sold, a firm should:

answer

continue manufacturing.

question

113. The point at which marginal cost and marginal revenue are equal always results in:

answer

maximization of profits.

question

114. ____determine what sales volume must be reached before the company's total revenue equals total costs and no profits are earned.

answer

Break-even analyses

question

115. The typical break-even model assumes a given fixed cost and a:

answer

constant average variable cost.

question

116. Fixed cost contribution equals:

answer

price minus the average variable cost.

question

117. Your Memory Lane creates custom art prints that use graphs and icons in a street scene to commemorate special occasions. Suppose that Your Memory Lane has priced its product at $350 per print. Further, it has determined that the company's fixed cost is $12,500, with average variable costs per print of $250. What is the fixed cost contribution per print?

answer

$100

question

118. Your Memory Lane produces custommade art prints that include graphics and icons to celebrate life's special moments. For example, on his wedding anniversary, David had an art print produced that celebrated highlights of his ten years with his wife, Kathy. Suppose that Your Memory Lane sells the custom artwork for $500. It estimates its average variable costs to be $200 per unit produced. It figures its fixed costs to be $900,000 per year. How many prints does it have to sell to break even?

answer

3,000 prints

question

119. Pet's Eye View Digital Camera is a small, durable digital camera that pet owners can clip to their pets' collars. A programmable timer takes pictures every few minutes, recording a photographic diary of the pet's day. The camera sells for $25. The average variable cost for each camera is $10 and the total annual fixed costs for plant operation are $45,000. What is the break-even point in units?

answer

3,000

question

120. Regency, Inc. makes disposable cap and gown sets for graduations. Each cap and gown set sells for $15. The average variable cost for manufacturing ten cap and gown sets is $100. Total fixed costs for the year equal $65,000. Calculate the break-even point in units.

answer

13,000

question

What is the annual break-even point in units for the company?

answer

250,000

question

122. Which of the following statements describes a limitation associated with break-even analysis?

answer

It is sometimes difficult to ascertain whether a cost is fixed or variable.

question

123. Which of the following statements about pricing strategies throughout the product life cycle is NOT true?

answer

With inelastic demand, price will be set low during the introduction stage.

question

124. Prices generally begin to stabilize:

answer

as a product enters the growth stage.

question

125. When Apple, Inc. developed and introduced the iPad, it was unique as it essentially combined a touch-based portable computer, a wireless marketplace, and an eBook reader. As such, in the short run, it seemed that demand for the product would be inelastic, with no real existing competition. The recommend pricing strategy in such a situation would be:

answer

high initial price, falling slightly when entering the growth stage.

question

126. As a product enters the growth stage, prices generally begin to stabilize. One reason for this is that:

answer

the product has begun to appeal to a broader market.

question

127. Kroger supermarkets will place well-known brands on the shelves at high prices while offering their own Kroger brand at lower prices. This practice is an example of:

answer

selling against the brand.

question

128. Manufacturers can do all of the following to regain some control over the price their products are sold for at the retail level EXCEPT:

answer

require resellers to maintain prices in line with competitors' prices.

question

129. Shopping bots:

answer

search the Web for the best price.

question

130. Which of the following statements about the Internet is true?

answer

Business-to-business auctions on the Internet are likely to be more important than consumer auctions in the future.

question

131. During the hot summer months, or the week before a new class starts if there is still space available, the Nick Price golf school in Orlando, Florida, offers a 25 percent reduction to get golfers during the off-season or those making a last-minute decision. This is an example of pricing strategy used as a(n):

answer

promotion strategy.

question

132. Many consumers, especially when faced with an uncertain purchase decision, think that a high price:

answer

is a signal of quality.

question

133. 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:

answer

prestige pricing.

question

134. When the Apple iPhone 3G was introduced, users could buy the "I Am Rich" app for a price of $1,000. The app 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.

answer

prestige

question

135. Marketing managers who attempt to raise the quality image of their product by selling it at high prices are following a(n) _____ strategy.

answer

prestige pricing

question

136. 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:

answer

buy the most expensive pre-made quiche (perhaps paying too much), guessing that the price is related to quality.

question

137. When Jerry took delivery of his brand new (and very expensive) Jaguar automobile, he was filled with pleasure and excitement. This is an example of the_____effect associated with the price-quality relationship.

answer

hedonistic

question

138. The dimensions of quality that are important to consumers include:

answer

all of these choices.

question

139. Refer to Tesla Motors. The price of the Roadster was set so that the marginal revenue equals marginal cost. This represents a approach.

answer

profit maximization

question

140. Refer to Tesla Motors. If Tesla had assets of $5 million and net profits after taxes of $550,000, what is Tesla's return on investment?

answer

11 percent

question

141. Refer to Tesla Motors. What is the fixed cost contribution for the Roadster given average variable costs of $50,500?

answer

$78,000

question

142. Refer to Tesla Motors. If total fixed costs are $23,400,000 and the average variable cost is $50,500, how many Roadsters must Tesla sell to break even?

answer

300

question

143. Refer to Tesla Motors. Say Tesla set the price of the Roadster high because the company wanted to promote a high-quality image. What type of pricing does this represent?

answer

Prestige pricing

question

144. Refer to Specialty Cakes. Although many factors determine the prices charged by Cecilia Villaveces Cakes, the two primary determinants are:

answer

the demand for the good and the cost to the seller.

question

145. Refer to Specialty Cakes. Many party planners in the Southeast will only use Cecilia Villaveces Cakes at their parties--no matter what the price is. They know that Cecilia's cakes can make a party a success. Moreover, the cakes are what people remember most about the parties. From this description, you should assume Cecilia Villaveces Cakes have a(n):

answer

inelastic demand.

question

146. Refer to Specialty Cakes. Which of the following is the BEST example of a fixed cost for Cecilia Villaveces Cakes?

answer

Food preparation licenses

question

147. Refer to Specialty Cakes. Which of the following is the BEST example of a variable cost for Cecilia Villaveces Cakes?

answer

Flour and sugar

question

148. Refer to Specialty Cakes. To set the price of her cakes, Cecilia simply doubles her costs, which often include several hours of labor and expensive raw materials. This method of price setting is called:

answer

keystoning.

question

149. Refer to Specialty Cakes. There are many occasions for which people may need to buy a cake, but most people do not have the time or interest to learn about cakes and their bakers. These people who do not know about the quality of the Cecilia Villaveces Cakes might choose them because they:

answer

equate price and quality.

question

150. Refer to American Girl Doll. What is the revenue to American Girl if it sells 20 basic Kristen dolls?

answer

$1,800.00

question

151. Refer to American Girl Doll. American Girl is the primary seller of historically accurate dolls with accompanying books in a market where there is very little competition. It has no cash flow problems and is not interested in maximizing its sales. From this information, you should know American Girl has ______pricing objectives.

answer

profit-oriented

question

152. Refer to American Girl Doll. The popularity of the American Girl dolls is so great that an increase in the price of the basic Kristen doll and books by 5 percent will not significantly affect the demand for the product. The means that the demand for the American Girl doll is:

answer

inelastic.

question

153. Refer to American Girl Doll. Based on the information in the narrative, which of the following factors is most likely to affect the elasticity of demand for the doll?

answer

The absence of substitutes

question

154. Refer to American Girl Doll. In terms of the costs of producing the doll and its accessories, the salary of the graphic designer who does the layout for the American Girl catalog is a(n):

answer

fixed cost.

question

155. Refer to American Girl Doll. In terms of producing the doll and its accessories, the calico fabric used to make Kristen's dress is an example of a(n):

answer

variable cost.

question

156. Refer to American Girl Doll. You can buy a doll at Walmart for $5.99. The high price of the American Girl doll is used to promote a high-quality image. American Girl uses a_____pricing strategy.

answer

prestige

question

157. Refer to Smelly Fruit. If it cost a Thai farmer $100 to produce and $25 to market the Kan Yao durian that she sells for $200 at the marketplace, her revenue, for each durian sold, would be:

answer

$200

question

158. Refer to Smelly Fruit. Suppose that a Thai farmer sells ten Kan Yao durians in the marketplace at the going rate of $200 each. If it cost a Thai farmer $125 to produce and market the Kan Yao durian that she has sold, the difference between these two numbers ($75), times the number sold (ten), represents the farmer's:

answer

profit

question

159. Refer to Smelly Fruit. Suppose that you have decided to buy land in Thailand and become a durian producer. You see that the customary price for a Kan Yao is $200, so that is the price you decide to charge for your durian crop. This suggests you are using a _____ approach to setting your price.

answer

status quo

question

160. Refer to Smelly Fruit. At $200 per Kan Yao, demand for the fruit appears to be higher than supply. Suppose that at a price of $225, the amount demanded exactly meets the amount farmers are willing and able to supply. In this case, the $225 price would be considered the_____price.

answer

price equilibrium

question

161. Refer to Smelly Fruit. Over the past two years, the price for Kan Yao durian fruit has increased by 50 percent. If the amount sold has remained almost constant, we would say that demand is:

answer

inelastic

question

162. Refer to Smelly Fruit. The durian fruit is a unique product. To many people in Thailand, no other fruit tastes or smells anything like the durian. Its uniqueness, in the eyes of the customer, would tend to have which of the following?

answer

It would tend to make the durian more price inelastic.

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