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| 1 | |
Which of the following statements about how customers perceive price is true? |
| | A) | Deadbeats are customers who are not motivated by either price or low brands. |
| | B) | Price sensitivity among consumers apparently is connected to psychographic factors. |
| | C) | Deal shoppers are consumers who prefer certain brands and who try to buy these preferred brands at reduced prices. |
| | D) | Price does not influence consumers' perceptions of price. |
| | E) | All of the above statements about how consumers perceive price are true. |
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| 2 | |
In 2002, Fast Retailing, a Japanese company, opened 21 stores in the United Kingdom. A year later, it closed 16 of these stores when its goal of obtaining an 8 percent return on its sales became unfeasible. Fast Retailing had a _____ pricing goal. |
| | A) | profit-oriented |
| | B) | sales-oriented |
| | C) | customer-oriented |
| | D) | status quo-oriented |
| | E) | resource maximization |
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| 3 | |
Which of the following statements about status quo pricing goals is true? |
| | A) | The maximization of profit is a commonly used status quo pricing goal. |
| | B) | To many consumers, status quo goals have an ugly connotation. |
| | C) | Status quo pricing is often used by leaders in highly differentiated industry. |
| | D) | For a company to successfully implement status quo pricing goals, there must be an industry leader. |
| | E) | Status quo pricing goals are common in industries where the product is highly standardized. |
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| 4 | |
Which of the following is an example of how the base price of an item is influenced by the product element of its marketing mix? |
| | A) | The base price is influenced by how much the company depends on personal selling. |
| | B) | The base price is influenced by whether there is a trade-in involved. |
| | C) | The base price is influenced by how much advertising is done by the product's retailer. |
| | D) | The base price is influenced by how many different middlemen handle the product. |
| | E) | The base price is influenced by the types of advertising media used. |
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| 5 | |
Harding Kennel boards dogs. To board a dog that weighs 10 pounds or less, the cost is $8.50 per night. To board a dog that weighs more than 40 pounds is $10.00 per night. Dogs in between these two weights are charged $9.00 per night. Which of the following statements gives an economic reason for the cost differences? |
| | A) | The variable costs of feeding the animals are reflected in the price differences. |
| | B) | The fixed costs of the salaried employee who takes care of the animals require a higher fee for larger dogs. |
| | C) | As the number of dogs being boarded increases, the average fixed cost curve moves upward. |
| | D) | The marginal cost curve for the kennel is shaped like a bell curve. |
| | E) | Average fixed costs for the kennel increase at an increasing rate as the number of dogs being boarded increases. |
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| 6 | |
Harding Kennel boards dogs. To board a dog that weighs 10 pounds or less, the cost is $8.50 per night. To board a dog that weighs more than 40 pounds is $10.00 per night. Dogs in between these two weights are charged $9.00 per night. Due to a viral infection that one of the boarding dogs had when it stayed at the kennel, the entire operation had to be closed for two weeks so the kennel cages and exercise area could be thoroughly cleaned and disinfected. During that period when the kennel was NOT boarding dogs,: |
| | A) | its variable costs remained the same |
| | B) | the kennel should have used status-quo pricing |
| | C) | its average fixed cost was zero |
| | D) | its fixed costs remained the same |
| | E) | none of the above occurred |
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| 7 | |
Most companies establish their prices based on marginal analysis, competitive market conditions, and: |
| | A) | whether the company has excess capabilities |
| | B) | their need for market stabilization |
| | C) | total cost plus a desired profit |
| | D) | desired sales volume |
| | E) | profit maximization |
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| 8 | |
A New Hampshire mountain inn does a tremendous amount of tourist business from April until October. For the rest of the year, the resort is virtually inaccessible to tourists. One of the ways this inn differentiates itself is through its experienced staff. To keep its experienced staff during its slack season, it could determine its price through: |
| | A) | expected pricing |
| | B) | cost-plus pricing |
| | C) | marginal cost pricing |
| | D) | price elasticity |
| | E) | price inelasticity |
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| 9 | |
Which of the following statements about pricing by middlemen is true? |
| | A) | Middlemen typically set the base price. |
| | B) | Cost-plus pricing is not widely used by middlemen. |
| | C) | Middlemen do not use competitive considerations when setting prices. |
| | D) | All retailers use the same markup on all the products they carry. |
| | E) | Only service providers with indirect channels of distribution use market-influenced pricing. |
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| 10 | |
The Chocolate Garden is a company that sells truffles. A one-pound box of candy costs $39.00. The owner of a company pays herself a $45,000 annual salary. She owns the building and the appliances used to make the truffles. Her variable costs per box of truffles are $15.00. Her only other fixed costs are insurance and a business license for which she pays $1150 per year. Calculate the company's break-even point in units. |
| | A) | 1,923 boxes |
| | B) | 1,875 boxes |
| | C) | 48 boxes |
| | D) | 3,077 boxes |
| | E) | 1,184 boxes |
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| 11 | |
There are two basic assumptions that underlie a simple break-even analysis. One of these assumptions is: |
| | A) | marginal revenue it derived from the sale of the last unit |
| | B) | variable costs vary per unit produced |
| | C) | the company has a price stabilization goal |
| | D) | the company uses cost-plus pricing |
| | E) | total fixed costs are constant |
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| 12 | |
Marginal analysis: |
| | A) | is more commonly used than break-even analysis |
| | B) | can be useful in determining past price movements |
| | C) | requires too much intuition to be done by computer technology |
| | D) | is most effective when used for pricing new products |
| | E) | shows the point at which the company will start to make a profit |
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| 13 | |
Under a market condition of perfect competition,: |
| | A) | sellers have no discernible control over the selling price |
| | B) | products are priced right at market level |
| | C) | product differentiation is absent |
| | D) | sellers are well-informed |
| | E) | all of the above are true |
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| 14 | |
In 2002, Fast Retailing, a Japanese company, opened 21 stores in the United Kingdom. It sold casual clothing at discount prices. It most likely used which of the following pricing strategies? |
| | A) | trading up pricing |
| | B) | marginal cost pricing |
| | C) | market-based pricing |
| | D) | break-even pricing |
| | E) | pricing below competition |
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