Principles of Marketing Chapter 12 Quiz

What assumption does breakeven analysis make that limits its overall usefulness?

It relies on demand for a product being inelastic.

____________ is setting the price lower than competing brands in order to enter a market and quickly gain a significant share of the market.

Penetration pricing

At what point does a firm maximize profit?

The point at which marginal cost equals marginal revenue

A market share objective

can be used effectively whether total industry sales are rising or falling.

The three primary bases for developing prices are

demand, competition, and cost.

If a product is priced based on how many or how few people want it at a particular time and place, ____ pricing is being used.

demand-based

When establishing prices, a marketer's first step is to

develop pricing objectives

The fact that senior citizens are charged a lower price at movie theaters than younger adults is an example of ____ pricing.

differential

Pricing strategies and methods

help direct and structure the selection of a final price.

For most products, a(n) ____ relationship exists between the price of a particular product and the quantity demanded.

inverse

Which of the following would be used in setting the price of a new product if considerable competition is expected?

penetration pricing

A product that has more features than those of its competition, or that is perceived to be of higher quality, warrants using which type of pricing strategy?

premium pricing

When an organization sets a number of prices for selected groups of merchandise, this is commonly referred to as

price lining

Price leaders, comparison discounting, and special-event pricing are applications of

promotional pricing

If a business decides to reduce its prices once in a while on an unsystematic basis, it is using

random discounting.

Most pricing objectives based on ____ are achieved by trial and error because not all cost and revenue data are available when prices are set.

return on investment

When marginal cost is equal to marginal revenue, the firm should

stop producing additional units to maximize profits

Competition-based pricing is

used when costs and revenues are secondary to competitors' prices.