Chapter 14 Quiz Questions

______ shows the relationship between income and demand.

a demand curve

When firms set prices similar to those of competitors, they are following a strategy of

competitive parity

Dana owns a bakery where she sells cupcakes. Two blocks down there is another bakery, Sweet's Bakery, that sells cupcakes for $1 less than Dana. Dana decides to lower her price and match Sweet's Bakery prices. What type of pricing strategy is Dana implementing?

competitor oriented pricing

Marketers spend millions of dollars annually trying to create or reinforce brand loyalty. Brand loyalty changes the demand curve for the firm's products by

decreasing the price elasticity of demand

The Curtain's Coffee company is located in a business district with few customers on the weekend. To attract customers on Saturday and Sundays, it reduces its prices on these two days. This is an example of

dynamic pricing

Costs related to supply and costs related to demand are the two primary cost categories. T/F

false

A study found that, among addicted smokers, a 10 percent increase in the price of cigarettes resulted in a 2 percent decrease in quantity demanded. For these consumers, cigarettes have a(n) ________ price elasticity demand.

inelastic

The price elasticity of demand for a specific brand of deodorant is −.9. The market for this product is considered

inelastic

There is often only one provider of cable television services in each region of the country: Time Warner is in New York, Comcast is in most of New England, and so forth. When Comcast recently proposed a plan to buy Time Warner, the purchase ultimately could not be completed, mostly due to concerns that it would have caused Comcast to become an overly large ________ with too much power.

monopolistic

In a market with ________ there are many firms providing differentiated products.

monopolistic competition

Cross-price elasticity is the

percentage change in quantity demanded of Product A compared to the percentage change in the Price of Product B

For which of the following is demand likely to be least sensitive to price increases?

prescription drugs

Samar customizes Harley-Davidson motorcycles. No two cycles are alike. He notices that very few customers even ask the price of his motorcycles before they decide to purchase them. Demand for his motorcycles is probably

price inelasic

Historically, prices were

rarely changed except in response to radical shifts in market conditions.

Firms using a ________ to set prices believe that increasing sales will help the firm more than will increasing profits.

sales orientation

Byron gave the manager of his convenience store a set of binoculars so she could see the gasoline prices charged by the other convenience store at that intersection. Byron told the manager to always match the gasoline prices of the other store. Byron is using a ________ pricing strategy.

status-quo

Naomi tells her sales representatives the goal is to generate at least a 15 percent return on investment for all of the industrial building supplies they sell. Naomi is using a ________ pricing strategy.

target return

Unlike product, promotion, or place, price is the only part of the marketing mix

that generates revenue

Because consumers are generally more sensitive to price increases than to price decreases, it is easier to lose current customers with a price increase than it is to gain new customers with a price decrease. T/F

true

Consider a bakery like Entenmann's: The majority of the ________ costs are the cost of the ingredients, primarily flour.

variable