Chapter 20 quiz
If the product price is $100, average variable cost $40 per unit, and the total fixed costs are $120,000, what is the breakeven point?
2000 units
A certain location of O'Charley's Restaurant has annual fixed costs of $200,000. If an average tab at the restaurant is $60 and the variable costs per tab is $20, how many groups of customers must O'Charley's serve per year in order to break even?
5,000
If Roberts Electronics finds that the average total cost of its radar detectors and the marginal cost of its radar detectors are both $85, then
average total cost is at its lowest level
The owner of Big Bike Motorcycles is opening a new retail location. Which of the following is most likely to be a fixed cost for Big Bike Motorcycles?
building rent
ACE Electronics introduces a new voice-activated personal computer that no longer requires a keyboard. ACE charges the high price of $11,000 per unit, thus generating large profits because it has a 20 percent market share. ACE's major problem in the future will most likely be
competition
a deduction from list price for purchasing large quantities aggregated over a stated period of time is a
cumulative quantity discount
both the federal trade commission and the wheeler-lea act prohibit
deceptive pricing
which of the following is not a method used to determine transfer prices
discounted standard cost
reductions for transportation and other costs related to the physical distance between buyer and seller are known as
geographic pricing
a price developed in the consumers mind through experience with the product is called
internal reference point
If the terms of a business exchange are 2/10 net 30, this means that the transaction
involves a cash discount if paid within ten days
A product under nonprice competition would most likely not succeed in the market if
it is easy to duplicate
To maintain market share and revenue in an increasingly price-sensitive market, companies have focused on quality, used labor-saving technologies, and used efficient manufacturing processes. These tactics have provided gains in productivity that have translated into ____ for the consumer.
lower costs for the company and lower prices
if a firm currently produces 2,500 products per month and decides to produce 2501, it will incur
marginal cost
If Colgate-Palmolive wants to maximize profit on its toothpaste, it should operate at the point where
marginal revenue equals marginal cost
price is considered to be the variable in the marketing mix that is
most flexible
ethan is an operations unit manager for Morningstar Foods. So far in developing his monthly budget, he has identified the following costs: Overhead at $120,000; Packaging at $70,000; Advertising at $60,000; Salaries at $400,000; Food production at $90,000, and Distribution at $22,000. The fixed costs in this situation would be
overhead, advertising, and salaries
If Wilson Sporting Goods faces a standard demand curve that exists for most products, as it raises the price of its tennis rackets, the
quantity demanded goes down
The degree to which the price of a product enhances a customer's satisfaction with the purchase experience and with the product after the purchase is part of their
response
premium-priced products are usually marketed through
selective or exclusive distribution
the ___ prohibits price fixing firms in an industry
sherman antitrust act
which factor is least likely to affect pricing decisions
shifting stock values
monopolies usually keep their prices at a level that generate a reasonable but not excessive return primarily because
they want to avoid govt. regulations on their pricing
In the long run, the J. F. Smucker Company must view ____ as the absolute lowest price for its Jif brand peanut butter.
total costs
if a product has an inelastic demand and the manufacturer raises its price
total revenue will increase
which of the following statements about price elasticity is false
when price is raised on a precut that has an inelastic demand, then total revenue will decrease
