Cengage Ch.12 Questions

A major reason why the final price may be different than what may result from the remaining steps in the price setting process is a. competitors' prices are higher and therefore the final price has to be lowered. b. the final price has to be adjusted to be consistent with industry practices. c. the price resulting from the other steps in the pricing process is too low. d. competitors' prices are higher and thus the final price must be raised. e. customers would not pay a price resulting from a pricing strategy because that price is too high.

b

Spacely Inc.'s sprockets have inelastic demand. If Spacely raises the price of sprockets, what will be the result? a. an increase in total revenue b. an increase in market share c. a decrease in total revenue d. a decrease in market share e. a decrease in product inventory

a

The Federal Trade Commission has established guidelines for _______: If the higher price against which the comparison is made is the price formerly charged for the product, the seller must have made the previous price available to customers for a reasonable time period. a. comparison discounting b. special-event pricing c. price leaders d. bait pricing e. reference pricing

a

Which of the following objectives is likely to be more expensive for a firm as the cost of materials and research and development may be greater? a. product quality b. market share c. status quo d. cash flow e. profit

a

Which of the following pricing objectives can reduce a firm's risks by helping to stabilize demand for its products? a. status quo b. product quality c. market share d. cash flow e. profit

a

Which of the following should be accomplished after developing pricing objectives? a. selecting a basis for pricing b. assessing the target market's evaluation of price c. evaluating competitors' prices d. determining a specific price e. selecting a pricing strategy

b

ACME Corp.'s widgets have elastic demand. If ACME raises the price of widgets, what will be the result? a. a decrease in market share b. an increase in total revenue c. a decrease in total revenue d. a decrease in product inventory e. an increase in market share

c

Which of the following pass on to a business customer the cost savings gained through lower per-unit selling costs of larger orders? a. cash discounts b. trade discounts c. quantity discounts d. allowances e. seasonal discounts

c

Which pricing strategy provides the most flexible introductory base price? a. penetration pricing b. periodic discounting c. price skimming d. captive pricing e. premium pricing

c

Which of the following product-line pricing strategies is NOT generally used for business products? a. price lining b. negotiated pricing c. premium pricing d. psychological pricing e. captive pricing

d

Which of the following shows the quantity of products a firm expects to sell at various prices if other factors remain constant? a. demand line b. break-even point c. marginal analysis d. demand curve e. reference price

d

A business' Presidents Day sales are an example of _____. a. periodic discounting b. penetration pricing c. negotiated pricing d. price skimming e. secondary-market pricing

a

A business's rental of production space is an example of a _____. a. fixed cost b. total cost c. break-even point d. variable cost e. marginal cost

a

Which of the following is calculated by dividing the variable costs by the number of units produced? a. average fixed cost b. average variable cost c. marginal cost d. break-even point. e. average total cost

b

ACME has a pricing objective to increase its primary product's sales relative to total industry sales. This is best describe as a(n) _____. a. product quality objective b. cash flow objective c. status quo objective d. market share objective e. return-on-investment objective

d

Kara Thrace operates a service business that engages in systematically collecting data on brands and prices at competitors' stores. For which stage of the price establishment process would this service be most appropriate? a. developing pricing objectives b. selecting a basis for pricing c. assessing the target market's evaluation of price d. evaluating competitors' prices e. selecting a pricing strategy

d

Which of the following is the point at which the costs of producing a product equals the revenue made from selling the product? a. marginal revenue b. demand curve c. marginal cost d. break-even point e. fixed cost

d

ACME Corp. offers a price discount to encourage prompt payment. Which of the following is it likely to use? a. allowance b. seasonal discount c. trade discount d. quantity discount e. cash discount

e

Which of the following charges the same price to all customers regardless of geographic location, and the price is based on average shipping costs for all customers? a. F.O.B. destination pricing b. freight absorption pricing c. base-point pricing d. zone pricing e. uniform geographic pricing

e

Which of the following pricing strategies sets the basic product in a product line low, but the price on the items required to operate or enhance it are higher? a. price lining b. premium pricing c. bait pricing d. reference pricing e. captive pricing

e