Chap 19 Practice Questions
What equation shows organizations the relationship between price and profit?
(Price × Quantity Sold) Total Costs = Profits
If a company increased its price from $100 to $120 and the percentage change in quantity demanded was 40 percent, the price elasticity of demand for this product is
-2
What does the demand curve for a prestige product look like?
It forms a curve where the greatest quantity sold comes at a medium price and the quantities fall as the price increases or decreases.
Which of the following prohibits price discrimination that lessens competition among wholesalers and retailers?
Robinson-Patman Act
Marketers generally view _____ as the minimum price a product can be sold for.
costs
Both the Federal Trade Commission Act and the Wheeler-Lea Act prohibit
deceptive pricing
For most products, a(n) ____ relationship exists between the price of a particular product and the quantity demanded.
inverse
Immediately after the breakeven point, a firm starts to
make profits
Sellers that emphasize distinctive product features to encourage brand preferences among customers are practicing
non-price competition
Price is a key element in the marketing mix because it relates directly to
the generation of total revenue.
At the breakeven point,
the money a company brings in from selling products equals the amount spent producing the products
Price is
the value that is exchanged for products in a marketing transaction.
What do all of the following have in common: tuition, fee, premium, retainer, dues?
they are all different concepts of price
One advantage of nonprice competition is that
a firm can build customer loyalty
Which of the following products is most likely to have an elastic demand curve?
airline tickets for vacation travel
The oldest form of exchange trading of products is known as
barter
A graph of the quantity of products marketers expect to sell at various prices if other factors remain constant is a
demand curve
For most firms in the United States, demand curves are
downward sloping
When a customer is considering the purchase of a product in a less-familiar product category, that individual is likely to rely more heavily on
external reference price
A price developed in the consumer's mind through experience with the product is called a(n)
internal reference price
When marketers emphasize price as an issue and match or beat the prices of other companies, they are using
price competition
A measure of sensitivity of demand in relation to changes in price is
price elasticity of demand
To determine the breakeven point in units, divide the fixed costs by
price minus variable costs
The ___________ prohibits price fixing among firms in an industry.
sherman antitrust act
The point at which the costs of producing a product equal the revenue earned from selling the product is
the breakeven point
If a product has an inelastic demand and the manufacturer raises its price,
total revenue will increase
Marginal analysis involves examining
what happens to a firm's costs and revenues when production is changed by one unit.