Use LEFT and RIGHT arrow keys to navigate between flashcards;
Use UP and DOWN arrow keys to flip the card;
H to show hint;
A reads text to speech;
100 Cards in this Set
- Front
- Back
|
________ is the assignment of value, or the amount a consumer must give to receive a product.
|
C) Price |
|
|
Which of the following statements about price is true?
|
C) Price can mean exchange of nonmonetary goods or services. |
|
|
The value of something we give up in order to obtain something else is referred to as a(n) ________.
|
B) opportunity cost |
|
|
Which of the following is NOT a type of pricing objective?
|
A) elasticity |
|
|
In price planning, a firm would be most likely to set a profit objective for which of the following products?
|
C) a fad such as Beanie Babies |
|
|
A company that intends to maintain low-end pricing policies to make the market unattractive for its competitors is using which of the following pricing objectives in its price planning?
|
D) competitive effect |
|
|
Which of the following is true about the demand curve?
|
A) It is used to illustrate the effect of price on the quantity supplied. |
|
|
According to the law of demand, which of the following is true?
|
A) If prices decrease, customers will buy more. |
|
|
Why do marketers consider prestige products to be an exception to the law of demand?
|
B) Increasing the price of prestige products can make them seem more desirable. |
|
|
What is the first step a marketer should take to estimate a product's potential sales?
|
C) estimate total demand for the product in the market |
|
|
Which of the following is a measure of the sensitivity of customers to changes in price?
|
C) price elasticity of demand |
|
|
How is the price elasticity of demand calculated?
|
B) dividing percentage change in quantity demanded by percentage change in price |
|
|
Which of the following occurs when price is inelastic?
|
A) Price and revenue change in the same direction. |
|
|
Demand would most likely be inelastic for which of the following?
|
E) basic necessities |
|
|
When demand is ________, increases in price result in increases in total revenues, while decreases in price result in decreases in total revenue.
|
B) inelastic |
|
|
The changes in prices of other products affect the demand for an item. This is a phenomenon called ________.
|
A) cross-elasticity of demand |
|
|
________ are the per-unit costs of production that will fluctuate depending on how many units or individual products a firm produces.
|
B) Variable costs |
|
|
________ do not vary with the number of units produced.
|
B) Fixed costs |
|
|
________ are the sum of the ________ and ________ for any given level of production.
|
D) Total costs; fixed costs; variable costs |
|
|
Break-even analysis is used to examine the relationship between ________.
|
C) costs and price |
|
|
Which of the following statements about the break-even point is true?
|
E) It is calculated using contribution per unit costs and total fixed costs. |
|
|
The break-even point is the point at which ________.
|
A) the total revenue and total costs lines intersect |
|
|
To determine the break-even point, a firm needs to first do which of the following?
|
C) calculate the contribution per unit |
|
|
________ lets marketers look at cost and demand at the same time and identify the output and the price that will generate the maximum profit.
|
C) Marginal analysis |
|
|
Which of the following statements about marginal analysis is true?
|
D) Profit is maximized at the point at which marginal cost is exactly equal to marginal revenue. |
|
|
Which of the following is an external influence that affects pricing decisions?
|
B) competition |
|
|
When setting prices, a company must consider factors in its pricing environment. ________ such as the business cycle, economic growth, and consumer confidence can have a significant impact on the firm's pricing strategies.
|
B) Economic trends |
|
|
In a market with ________, there are many sellers, each offering a slightly different product. Firms can differentiate products and focus on nonprice competition.
|
B) monopolistic competition |
|
|
In a market with ________, the market consists of many buyers and a few sellers who are likely to have similar pricing.
|
C) oligopolistic competition |
|
|
The most common cost-based approach to pricing is ________.
|
D) cost-plus pricing |
|
|
The method of setting prices in which marketers total all the costs for the product and then add an amount to arrive at the selling price is called ________.
|
C) cost-plus pricing |
|
|
Lawyers, accountants, and other professionals typically price by adding a standard markup for profit. This is known as ________.
|
C) cost-plus pricing |
|
|
In which type of pricing is the selling price based on an estimate of volume or quantity a firm can sell in different markets at different prices?
|
C) demand-based |
|
|
With target costing, marketers first ________ and then ________.
|
E) determine a reasonable selling price; target costs to ensure that the price is met |
|
|
Two forms of demand-based pricing are ________.
|
D) target costing and yield management pricing |
|
|
Which of the following is an example of a pricing strategy that focuses on customers' needs?
|
B) everyday low pricing |
|
|
A firm is using ________ when it charges a high, premium price for a new product with the intention of reducing the price in the future.
|
A) a skimming price |
|
|
Which of the following should be true for a skimming price to be successful?
|
E) There should be little chance that competitors can quickly enter the market. |
|
|
A firm is using a(n) ________ strategy when it introduces a product at a very low price to gain market share early on.
|
D) penetration pricing |
|
|
Which of the following is a reason that a marketer would choose a penetration pricing strategy?
|
E) to discourage competition from entering the market |
|
|
A new product carries a low price for a limited period of time to attract customers in what type of pricing strategy?
|
B) trial pricing |
|
|
________ refers to the sale of two or more goods or services as a single package for one price.
|
C) Price bundling |
|
|
________ is a pricing tactic a firm uses for two products that work only when used together. The firm sells one item at a very low price and then makes its profit on the second high-margin item.
|
C) Captive pricing |
|
|
Another name for F.O.B. factory pricing is ________ pricing.
|
C) F.O.B. origin |
|
|
With ________, the seller pays both the cost of loading and transporting the product to the customer.
|
D) F.O.B. delivered pricing |
|
|
When a company charges the same rate to ship a product anywhere in the United States, it is using which form of pricing?
|
D) uniform delivered |
|
|
Whether a firm sells to businesses or directly to consumers, most pricing structures are built around which of the following?
|
E) list prices |
|
|
A list price is also referred to as a(n) ________.
|
D) suggested retail price |
|
|
Trade or functional discounts are offered by manufacturers to which of the following?
|
A) channel intermediaries who perform wholesaling tasks that the manufacturer would otherwise have to perform |
|
|
Which of the following is true about noncumulative quantity discounts?
|
A) They encourage large single orders |
|
|
A quantity discount is a price reduction to buyers who purchase ________.
|
B) large volumes |
|
|
When a snow blower shop offers a price reduction to customers who buy during the spring and summer, the shop is giving a(n) ________ discount.
|
B) seasonal |
|
|
On the Internet, price can easily be adjusted to meet changes in the marketplace. This is called ________.
|
B) dynamic pricing |
|
|
Which of the following allow shoppers to bid on everything from bobble heads to health-and-fitness equipment?
|
D) online auctions |
|
|
In a(n) ________, all of the buyers know the highest price bid at any point in time.
|
C) open auction |
|
|
The idea of externalities is the basis of ________.
|
C) freenomics |
|
|
Freenomics is a new business model based on pricing goods ________.
|
B) at zero or close to zero |
|
|
Which of the following is a set price or price range in consumers' minds that they refer to in evaluating a product's price?
|
B) internal reference price |
|
|
Often consumers base their perception of price on what they perceive to be the customary or ________.
|
B) fair price |
|
|
A(n) ________ occurs when customers decide that two different brands of pain reliever have the same product quality because they have basically the same product characteristics and similar prices.
|
B) assimilation effect |
|
|
A(n) ________ strategy is implemented when a store places two similar items next to each other, highlighting the fact that the price of one item is slightly lower than that of the other item.
|
A) assimilation effect |
|
|
When consumers are unable to judge the quality of a product through examination or prior experience, they usually do which of the following and assume that the higher-priced product is the higher-quality product?
|
A) make a price-quality inference |
|
|
Consumers usually perceive higher-priced products as ________.
|
B) having high quality |
|
|
A business using price lining is doing which of the following?
|
D) using price points to determine its pricing strategy |
|
|
From a marketer's point of view, price lining is a way to do which of the following?
|
B) maximize profits |
|
|
Which of the following is a pricing strategy that turns the typical assumption about price-demand relationships on its head?
|
E) prestige pricing |
|
|
Enforcing laws against ________ is complicated because such practices are similar to the legal practice of "trading up."
|
C) bait-and-switch tactics |
|
|
Some retailers advertise items at very low prices or even below cost just to get customers into the store. The rationale for implementing this ________ strategy is the belief that once a customer is in the store she will buy the advertised item as well as other items at regular prices.
|
D) loss leader pricing |
|
|
In some states, unfair trade practices acts ________.
|
D) prohibit the selling of products below cost |
|
|
The Robinson-Patman Act does NOT include regulations that ________.
|
B) protect final consumers |
|
|
Price fixing occurs when two or more companies conspire to ________.
|
A) keep prices at a certain level |
|
|
Which of the following occurs when competitors making the same product jointly determine what price each will charge customers for the item?
|
A) horizontal price fixing |
|
|
Which of the following occurs when manufacturers or wholesalers attempt to force retailers to charge a certain price for their products?
|
A) horizontal price fixing |
|
|
Federal legislation on price-fixing requires that sellers set their prices ________.
|
B) without communication with competitors |
|
|
) By using ________, a company deliberately sets a low price with the intention of driving its competition out of business.
|
D) predatory pricing |
|
|
When setting prices, a leading manufacturer of nutritional supplements decided to institute a pricing strategy that would support a five percent increase in sales over the next three years. What type of pricing objective has the company set?
|
A) profit |
|
|
When Home Depot stores entered the Canadian market, there were already stores providing similar services and products. To get people to try the Home Depot stores, the chain deliberately sold merchandise below the price that the Canadians were used to. What type of pricing objective did Home Depot use?
|
C) competitive effect |
|
|
Many people rely on a prescription drug to control their cholesterol. An increase in the price of the drug would have little effect on the quantity demanded because there are no substitutes for the drug and because people who take it have no choice but to continue taking it if they wish to stay healthy. The demand for the cholesterol drug is ________.
|
B) inelastic |
|
|
When Joe's Coffee Nook raised the price of a latte, Joe noticed a substantial change in how many lattes he sold daily. A price reduction caused his sales to increase. From this information, you can assume the demand for lattes is ________.
|
D) elastic |
|
|
Sellers should know that the less elastic the demand for their product is, the more advantageous it is for them to ________.
|
B) raise the price |
|
|
Which of the following is an example of a variable cost for an amusement park?
|
B) food cart supplies |
|
|
For a company that manufactures plastic signs, the printing press used to make the signs, the manager's salary, and the utilities are all examples of ________.
|
A) fixed costs |
|
|
As a manufacturer increases price, the ________ drops.
|
NOT SURE |
|
|
Joe Bergerson makes and sells maple racks for cooling cakes and cookies. Joe knows that it costs $15 to make one rack, and he wants to earn a 25 percent profit on each rack. Which approach to pricing is Joe most likely to use?
|
C) cost-plus pricing |
|
|
Swatch surveyed the market and identified an unserved segment of watch buyers. Using these results, they created a watch at a price consumers were willing to pay. The unorthodox order of this marketing mix decision is an example of ________.
|
C) target costing |
|
|
The average price Xerox charged when it introduced the first stand-alone fax machine was $12,700. This premium price was a way for Xerox to recoup some of the research and development costs that went into production. Xerox used ________.
|
A) a skimming price |
|
|
Valeo Fashions has just introduced a new line of fashion dresses for teens. The line will initially enter the market at high prices in a ________ strategy.
|
B) skimming pricing |
|
|
When a beverage maker came out with a new drink and priced it at half price for a month to attract buyers, the company was using a(n) ________ strategy.
|
D) trial pricing |
|
|
Johnson Boats wants to introduce a new model of boat into mature markets in highly developed countries with the goal of quickly gaining mass-market share. As a consultant, you should recommend a ________ pricing strategy.
|
B) penetration |
|
|
A skimming price strategy would likely be most effective in selling which of the following?
|
B) an electronic device which involved a great deal of research and development to bring to market |
|
|
Mach 3 razor blades must be used in the Mach 3 razor. Which type of pricing is most likely used for the razor blades?
|
C) captive |
|
|
Manufacturers of which of the following would be most likely to use freight absorption pricing?
|
B) laptop computers |
|
|
As a result of the ________, Rick decided the candy priced at $2.50 per pound could not be nearly as good as the candy priced at $9.50 per pound.
|
B) contrast effect |
|
|
A local restaurant sells lunch entrees for $7.95, $9.95, and $11.95. From this information, you can infer the restaurant uses which of the following?
|
B) odd pricing and price lining |
|
|
A hamburger stand near the local mall sells hamburgers for $3.99, drinks for $1.99, and fries for $1.49, while a gourmet restaurant nearby sells entrees for $20, $30, and $45. Both of these restaurants are using ________.
|
C) psychological pricing |
|
|
After looking at the ads in her Sunday paper, Ruby decided to visit a local nursery and buy potting soil at $1.99 a bag. The regular price is $4.99 a bag. While Ruby was there she also purchased three bushes, six flowering plants, and a bird bath. You can infer from this information that the nursery used the bags of potting soil as a(n) ________.
|
|
|
|
When Circuit Town Electronics sets its televisions at three price levels of $699, $899, and $1,099, it is most likely using ________.
|
B) price lining |
|
|
A number of top fashion-modeling agencies were charged with ________ because they were jointly determining what commissions they would charge for models.
|
E) horizontal price-fixing
|
|
|
Bayer AG agreed to pay $46 million as part of a law settlement for conspiring with Archer-Daniels-Midland (ADM) to keep prices of citric acid at a certain level. These two international companies were guilty of ________.
|
D) price-fixing |
|
|
Savings for You, a discount retail chain, is highly competitive. When entering a new market, Savings for You often cuts prices so deeply that it sells below costs, effectively pushing smaller companies with less purchasing power out of the market. Savings for You is most at risk of being accused of ________.
|
C) predatory pricing |
