Market Management Exam 3 - Ch 13

e. social responsibility

"a firm may forgo a higher profit on sales because it wants to recognize its stakeholder obligations." what concept does this statement explain? a. market share b. survival c. unit volume d. profit e. social responsibility

d. low prices

A common pricing tactic today is the use of special fees and surcharges that add to a list price, a response to consumers' zeal for ________ combined with the ease of making price comparisons on the Internet. a. qaulity b. value c. warranties d. low prices e. readily accessibly information

a. if price reductions are used to achieve volume objectives, it can sometimes come at the expense of profits

A negative aspect of selecting unit volume as a pricing objective is that a. if price reductions are used to achieve volume objectives, it can sometimes come at the expense of profits. b. it always positively correlates with a sales revenue objective. c. there are increased carrying costs with extensive inventories. d. production often cannot keep up with demand. e. it can create competition between divisions within the organization itself, causing conflicts over the allocation of resources.

e. increase, increase

Assuming there is no change in a product's price or the quantity demanded, if a business owner wants to increase her advertising expenses to $500 monthly, this would cause total costs to ________ and the break-even quantity to ________. a. stay the same; decrease b. stay the same; increase c. decrease; stay the same d. decrease; increase e. increase; increase

d. selecting an approximate price level

Determining cost, volume, and profit relationships would occur during which stage of the price-setting process? a. evaluating the success of the price strategy b. making special adjustments to the list price c. setting the list or quoted price d. selecting an approximate price level e. defining the scope of the product

d. increases from 2 to 3 million units oer year

Figure 11-3a shows that when the price for Red Baron frozen cheese pizzas moves from $8 to $6 per unit along the demand curve D1, the quantity demanded a. decreases from 3 to 2 million units per year b. stays the same c. decreases from 8 to 6 million units per year d. increases from 2 to 3 million units per year e. increases from 6 to 8 million units per year

e. impacts cannot be determined. Figure 11-3a does not indicate what happens to profit when the quantity demanded changes

Figure 11-3a shows that when the quantity demanded for Red Baron frozen cheese pizzas moves from 2 to 3 million units along the demand curve D1, the profit a. increases from $2 to $3 per unit. b. stays the same per unit. c. increases from $6 to $8 per unit. d. decreases from $8 to $6 per unit. e. impacts cannot be determined. Figure 11-3a does not indicate what happens to profit when the quantity demanded changes.

b. $50

Forever Quilting makes quilting kits priced at $120. The costs of the materials that go into each kit total $45. It costs $5 in labor to assemble a kit. The company has monthly expenses of $1,000 for rent and insurance, $200 for heat and electricity, $500 for advertising, and $4,500 for the monthly salary of its owner. Forever Quilting's unit variable cost for its kits is a. $170 b. $50 c. $120 d. $45 e. $5

a. an increase in demand that did not require a change in one or more demand factors

In Figure 11-3b, the demand curve shifts from D1 to D2. This most likely represents a. an increase in demand that did not require a change in price but was the result of a change in one or more demand factors. b. an increase in demand that required a decrease in price. c. a decrease in price from $8 to $6 per unit. d. no change in demand or price but a greater profit due to economies of scale. e. no change in price and a decrease in demand that results from internal business practice changes.

d. setting price objectives

Specifying the role of price in an organization's marketing and strategic plans is referred to as a. defining a profit mission. b. choosing a pricing plan c. determining the list or quoted price d. setting pricing objectives e. developing pricing constraints

c. incur a loss

Suppose you are the owner of a picture frame store. Assume that the average price customers are willing to pay for each picture frame is $120. Also, suppose your fixed costs (FC) total $32,000 (real estate taxes, interest on a bank loan, etc.) and unit variable cost (UVC) for a picture frame is $40 (labor, glass, frame, and matting). Figure 11-7a above shows that by selling 200 pictures, your picture frame store will a. earn a profit b. break even c. incur a loss d. have no variable costs e. have no fixed cost

b. unit variable cost

The break-even point (BEP) = [Fixed cost ÷ (Unit price − ________)]. a. total cost b. unit variable cost c. marginal revenue d. total expense e. total number of units produced or quantity

d. the profit equation

The formula Total revenue − Total cost, or [(Unit price × Quantity sold) − (Fixed cost + Variable cost)], represents a. the break even point b. the value equation c. average revenue d. the profit equation e. the sales ratio

e. a large portion of the market has inelastic demand for ice cream over a broad range of prices

The manufacturer of a new kind of fat-free ice cream that has the consistency and taste of regular ice cream is thinking of using a penetration pricing strategy for its new product. Which of the following conditions would argue against using a penetration pricing strategy for the tasty, fat-free ice cream? a. the ice cream market is highly elastic b. Retailers are not willing to pay for new brands of premium ice cream in the already overcrowded category. c. Economies of scale in production would be substantial. d. Once the initial price is set, it is nearly impossible to lower prices without alienating buyers. e. A large portion of the market has inelastic demand for ice cream over a broad range of prices.

e. 1,050 buckets

The owner of a small restaurant that sells takeout fried chicken and biscuits each month pays $2,500 in rent, $500 in utilities, $750 interest on his loan, insurance premium of $200, and $250 on advertising on local buses. A bucket of chicken is priced at $9.50. Unit variable costs for the bucket of chicken are $5.50. How many buckets of chicken does the restaurant need to sell to break even each month? a. 442 buckets b. 4,200 buckets c. 764 buckets d. 3,150 buckets e. 1,050 buckets

b. price elasticity of demand

The percentage change in quantity demanded relative to the percentage change in price is referred to as a. marginal revenue b. price elasticity of demand c. derived demand d. demand derivative of price e. average demand

b. total cost

The total expense incurred by a firm in producing and marketing a product, which equals the sum of fixed cost and variable cost, is referred to as a. unit cost b. total cost c. average cost d. marginal cost e. overhead cost

b. maximizing current profit

Three different objectives relate to a firm's profit. One objective, known as ________, is common in many firms because the targets can be set and performance measured quickly. a. break even strategy b. maximizing current profit c. managing for long run profits d. target return e. minimizing risk

d. managing for long-run profits

Three pricing objectives relate to a firm's profit. In one known as ________, a company gives up immediate profit in exchange for achieving a higher market share in the hopes of penetrating competitive markets. a. break-even strategy b. minimizing risk c. maximizing current profit d. managing long-run profits e. target return

a. shipping cost

Which of the following is a typical example of a variable cost? a. shipping costs b. insurance premiums c. rent on a building d. leases on delivery trucks e. executive salaries

a. although increased market share is a primary goal of some firms, others see it as a means to other ends, such as increased sales or profits

Which of the following statements regarding a market share pricing objective is most accurate? a. Although increased market share is a primary goal of some firms, others see it as a means to other ends, such as increased sales or profits. b. An advantage of market share as a pricing objective is that it is particularly insensitive to competitors' actions. c. Ironically, a market share objective is realized by raising prices in order to increase consumer confidence during the decline stage of a product's life cycle. d. A market share objective is often difficult for product managers since stockholders are looking for immediate dividends (return of profits). e. electing market share as a pricing objective is particularly effective if industry sales are growing.

b. generally, the greater the demand for a product, the higher the price that can be set

Which of the following statements regarding pricing constraints is most accurate? a. Pricing constraints must always be set, but they are rarely enforced. b. Generally, the greater the demand for a product, the higher the price that can be set. c. Even if a firm is trying to satisfy its obligations to its customers and society in general, it should ignore setting pricing constraints. d. At the corporate level, when setting pricing constraints, a firm must disregard current conditions in the marketplace because they are too temporal for long-term planning. e. It is possible to create pricing constraints with the greatest range possible in order to anticipate any and all changes in the marketing environment.

e. profit

________ = (Unit price × Quantity sold) − Total cost. a. net present value b. variable cost c. total revenue d. break-even point e. profit

c. the quanitity sold and price, which shows the maximum number of units that will be sold at a given price

a demand curve is a graph that relates a. total production costs to various price points in order to determine how many units must be sold in order to realize a predetermined profit b. the quantity sold and revenues, which shows the minimum number of units that must be sold in order to make a profit. c. primary demand to selective demand, which shows the growth of the market compared to change in market share. d. the quantity sold and price, which shows the maximum number of units that will be sold at a given price. e. revenues and costs, which shows the minimum number of units that must be sold to break even.

a. the number of distribution outlets carrying the product

all of the following are demand factors except a. the number of distribution outlets carrying the product b. consumer income c. the availability of similar products d. the price of similar products e. consumer tastes

e. the number of products in the line

all of the following are demand factors except which? a. the availability of similar products b. consumer tastes c. consumer income d. the price of similar products e. the number of products in the line

b. product obsolescence

all of the following are examples of pricing objectives except which? a. unit sales b. product obsolescence c. survival d. social responsibility e. market share

a. for most products and services, there is an agreed-upon price range set by makers

all of the following statements about price are true except which? a. For most products and services, there is an agreed-upon price range set by makers. b. Small changes in price can have big effects on both the number of units sold and company profit. c. The price must be right—in the sense that customers must be willing to pay it. d. The price for a product or service must earn a profit for the company. e. The price must generate enough sales dollars to pay for the cost of developing, producing, and marketing the product.

b. a technique that analyzed the relationship between total revenue and total cost to determine profitability at various levels of output

break even analysis is a. a process that investigates the difference between marginal revenue and marginal cost. b. a technique that analyzes the relationship between total revenue and total cost to determine profitability at various levels of output. c. the graph that shows the maximum number of products consumers will buy at a given price. d. a method of determining just how much a consumer is willing to pay for a product or service. e. the process of determining the quantity of product consumers will buy relative to the quantity produced by the firm.

b. the sum of the expenses of the firm that are stable and do not change with the quantity of a product that is produced and sold

fixed cost is a. the total expense incurred by a firm in producing and marketing a product, which equals the sum of overhead cost and variable cost. b. the sum of the expenses of the firm that are stable and do not change with the quantity of a product that is produced and sold. c. the change in expenses that results from producing and marketing one additional unit of a product. d. the sum of the expenses of the firm that vary directly with the quantity of a product that is produced and sold. e. the average amount of money received for selling one unit of a product or simply the price of that unit.

a. a small percentage decrease in price produces a smaller percentage increase in quality demanded

inelastic demand exists when a. a small percentage decrease in price produces a smaller percentage increase in quantity demanded. b. the quantity demanded remains the same regardless of any changes in marketing strategies. c. an increase in price is impossible due to government restrictions. d. a small percentage decrease in price produces a smaller percentage increase in quantity supplied. e. a small percentage increase in price produces a larger percentage increase in quantity demanded.

b. the money or other considerations (including other products and services) exchanged for the ownership or use of a product or service

price is... a. the highest monetary value a customer is willing to pay for a product or service. b. the money or other considerations (including other products and services) exchanged for the ownership or use of a product or service. c. the value judgment made by both the buyer and seller regarding an item's worth. d. the value assessed for the benefits of using a product or service. e. the value assigned to the exchange of products and services for other products and services.

d. factors that limit the range of prices a firm may set

select one that explains the concept of pricing constraints. a. barriers that must be overcome in order to set pricing objectives b. competitive pricing advantages one firm has over another c. barriers to entry a firm faces when launching a new product d. factors that limit the range of prices a firm may set e. different pricing strategies for each of the firm's products

c. the higher is the price that can usually be charged

the newer a product and the earlier it is in its life cycle, a. the lower the price the firm must charge b. the lower its production costs are c. the higher is the price that can usually be charged d. the lower its unit variable cost is e. the more competition it has

b. perceived benefits

the ratio of __________ to price is referred to as value. a. prestige b. perceived benefits c. anticipated quality d. profits e. costs

c. price

the ratio of percieved benefits to _________ is referred to as value. a. percieved cost b. prestige c. price d. profits e. percieved quality

d. the total money recieved from the sale of a product

total revenue is... a. the amount at which marginal costs exceed fixed costs b. the profit made from selling a product or service c. the least number of units sold needed to cover product, distribution, and promotional costs d. the total money recieved from the sale of a product e. the net gain in sales if the unit price is lowered

c. the practice of simultsneously increasing product and service benefits while maintaining or decreasing price

value-pricing is a. the list price minus incentives and allowances plus extra fees. b. the money or other considerations exchanged for the ownership or use of a product or service. c. the practice of simultaneously increasing product and service benefits while maintaining or decreasing price. d. the ratio of price to perceived benefits. e. the ratio of perceived benefits to price.

b. as the price is lowered, the quantity demanded increases, assuming all demand factors stay the same

which of the following illustrates movement along the demand curve? a. Prices remain the same, but there is a significant increase in demand. b. As the price is lowered, the quantity demanded increases, assuming all demand factors stay the same. c. Prices remain the same, but there is a significant decrease in demand. d. Movement along the curve indicates that some significant event has taken place outside the organization that has affected demand. e. As the price is raised, the quantity demanded increases, assuming all demand factors stay the same.

c. for some products, price influences the perception of overall quality, and ultimately value to customers

which of the following statements is most accurate? a. a consumers view of value is a function of his or her education and income b. Price plays a large role in assessing value but a very minor role in assessing quality. c. For some products, price influences the perception of overall quality, and ultimately value, to consumers. d. Price plays only a small part in a consumer's perceived value of a product or service. e. A consumer's view of a product's value depends almost entirely on external assessments of quality.

d. For marketing managers, sales revenue or unit sales can be easily translated into meaningful targets for a product line or brand.

which of the following statements regarding sales goals is most accurate? a. very often, cutting prices results in a decrease in market share b. An advantage of increasing unit volume sales is that it always results in an increase in profits. c. Setting unit volume sales as a pricing objective results in price wars with competitors, so the practice is limited to industries with few competitors. d. For marketing managers, sales revenue or unit sales can be easily translated into meaningful targets for a product line or brand. e. Cutting prices for a single product in a product line to raise unit sales often results in an increase in sales for related products in the line.