Marketing Ch 19

The Highland Racquet Club found that with annual fixed costs of $60,000, its breakeven point is 2,000 members when the membership charge is $60 per person per year. What is the variable cost per person for Highland?

$30

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 quantity demanded fell by 40 percent, the price elasticity of demand for this product is ___________

-2

A certain location of O'Charley's Restaurant has annual fixed costs of $200,000. If an average tab at the restaurant is $60 and the variable costs per tab is $20, how many groups of customers must O'Charley's serve per year in order to break even?

5,000

One advantage of nonprice competition is that _________

A firm can build customer loyalty

In conducting an assessment of her accounting firm, Paige discovers the following annual results: average charge per customer = $250; rent = $12,000; total billings = $150,000; employee compensation and benefits = $60,000; and other costs = $110,000. Given these results, Paige's profits would equal ________

A loss of $32,000

For most firms in the United States, demand curves are ____________.

Downward sloping

If Carnival Cruise Lines increased the price of its seven-day cruise package by 10 percent and, as a result, experienced a 20 percent decline in customer bookings, Carnival's demand would be __________

Elastic

Which of the following products is most likely to have an inverted C-shaped demand curve?

Eternity perfume

Roberts Electronics calculates that if it produces 15 radar detectors, its costs are $1,500, and if it produces 16 radar detectors, its costs are $1,590. In this instance, $90 is the firm's ___________ cost.

Marginal

Michelin notices that when the number of tires it sells increases from 1,000,000 to 1,000,001, total revenue rises $35. The $35 represents the firm's __________

Marginal revenue

If Colgate-Palmolive wants to maximize profit on its toothpaste, it should operate at the point where _________.

Marginal revenue equals marginal cost

Price is considered to be the variable in the marketing mix that is _________

Most flexible

Which of the following is most likely to have an inelastic demand curve?

Nonelective surgery

Marketers have no flexibility in setting prices under conditions of __________.

Perfect competition

French Quarter Inns drops the price of a suite from $225 to $195 per night and experiences a reduction in the quantity of rooms demanded of an average of five per night. This is an indication that suites at this hotel are apparently an example of a(n) ___________ product.

Prestige

Buyers who focus on purchasing products that signify prominence and status are _________.

Prestige-sensitive buyers

For most consumers, there is an assumed relationship between ___________

Price and quality

When marketers emphasize price as an issue and match or beat the prices of other companies, they are using _______

Price competition

Dividing the percentage change in quantity demanded by the percentage change in price gives the __________

Price elasticity of demand

To determine the breakeven point in units, divide the fixed costs by ___________

Price minus variable costs

Isabella is a product manager for The Container Store, a retailer of plastic bins and other storage containers. Sales have been declining in the past nine months and her management team is pressuring her to compete based on price discounts. However, Isabella is aware of the dangers associated with engaging in price competition. She knows that competitors can also change prices quickly and aggressively, which can result in a(n) ___________ that will be harmful to both companies.

Price war

Since Victoria's Secret has decided to use nonprice competition, it distinguishes its brand through all but which of the following?

Rebates

Which of the following prohibits price discrimination that lessens competition among wholesalers and retailers?

Robinson-Patman act

Which factor is least likely to affect pricing decisions?

Shifting stock values

According to economic theory, when marginal cost is equal to marginal revenue, the firm should _________

Stop producing additional units to maximize profits

Price is a key element in the marketing mix because it relates directly to ________

The generation of total revenue

What type of discount is given to a business purchaser for performing activities such as transporting, storing, and selling?

Trade

The Palasi Candy Company is a small business located in the northeastern United States. The owner of Palasi Candy is calculating the projected costs for the coming year. There is rent for the building, salaries for the retail employees, raw materials of sugar, chocolate, and other ingredients, wrappers for packaging of individual pieces of candy, boxes, and radio advertising. Palasi's ___________ are most likely to be the raw materials of sugar, chocolate, and other ingredients, as well as the wrappers

Variable costs

At the breakeven point, ________.

the money a company brings in from selling products equals the amount spent producing the products.