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.