MTKG chap 10 tests
A company must pay each month's bills for rent, heat, interest, and executive salaries regardless of the company's level of output. This exemplifies its ________ costs.
overhead
Price elasticity of demand is represented by ________ divided by ________.
percentage change in quantity demanded; percent change in price
________ is the only element in the marketing mix that produces revenue.
price
________ refers to the amount of money charged for a product or service.
price
In Viña del Mar, Chile, a large number of shops specialize in selling the same quality of seafood products along the beach frequented by tourists. No individual shop dares charge more than the going price without fearing loss of business to other shop-owners. This exemplifies ________.
pure competition
The experience curve reveals that ________.
repetition in production enhances efficiency
Companies using target costing ________.
start with an ideal selling price and then target costs that will ensure that the price is met
Milt Alden uses which of the following strategies for pricing his products?
starting with customer-value considerations
Why is markup pricing most likely popular?
Sellers do not need to make frequent adjustments as demand changes.
Which of the following is true of a pure competitive market?
Sellers spend little time on marketing strategy.
________, the more it pays for the seller to raise the price.
The less elastic the demand
Why is markup pricing most likely impractical?
The method ignores demand and competitor prices.
true of value-based pricing?
The targeted value and price drive decisions about what costs can be incurred and the resulting product design
Which of the following is true with regard to pure competition?
Under pure competition, no single buyer or seller has much effect on the going market price.
Which of the following exemplifies a pure competitive market?
a market where many buyers and sellers trade in a uniform commodity
The perceived value of different product offers can be reasonably assessed by ________.
conducting surveys and experiments
Companies can legitimately charge a higher price if ________.
consumers perceive that the company's product offers greater value
Which of the following processes does value-based pricing reverse?
cost-based pricing
The learning curve is representative of the ________.
drop in the average per-unit production cost that comes with accumulated production experience
Dips in the economy and the instant price comparisons made possible by the Internet have contributed to ________.
increased consumer price sensitivity
Which of the following involves introducing less-expensive versions of established, brand-name products?
good-value pricing
Department stores such as Kohl's and Macy's practice high-low pricing by ________.
having frequent sale days for store credit-card holders
A manufacturer has fixed costs of $100,000, a variable cost of $10 per unit of output, and break-even volume of 50,000 units. What should the manufacturer's unit cost be in order to break even?
$12
In 2011, the fixed costs of a company were $500,000, and its variable costs equaled $150,000. In 2010, the company made an annual profit of $200,000. It has been predicted that, despite a steady growth, the company's variable costs will likely equal $300,000 by 2013. The total costs of the company in 2011 were ________.
$650,000
When the price of a pack of Crispo potato wafers was increased from $4 to $5, the quantity demanded by local retail stores went down by 50%. Hence, the price elasticity of demand for Crispo is ________.
-2
If Alden raises the price of the handheld mixer by 2 percent and then the quantity demanded falls by 10 percent, what is the price elasticity of demand?
-5
Mansfield Pharmaceuticals markets Zipro, an antibiotic. The firm has fixed costs of $1,000,000 and variable costs of $2 per bottle of 50 tablets priced at $10 per bottle. What is the break-even volume?
125,000
There was a 35 percent increase in demand for a product after the seller decreased its price by 14 percent. Therefore, the price elasticity of demand is ________.
2.5
A company faces fixed costs of $100,000 and variable costs of $8 per unit. It plans to directly sell its product in the market for $12. How many units must it produce and sell to break even?
25,000
Which of the following is true about the demand curve?
A demand curve shows the number of units the market will buy in a given time period at different prices that might be charged
Herbie Inc., a firm manufacturing sandwich makers, has fixed costs of $250,000, variable costs of $20 per unit of output, and expected unit sales of 50,000 units. What is the unit cost of a sandwich maker manufactured by Herbie?
$25
The fixed cost in manufacturing a single LED monitor is $40 and the variable cost is $12. If the company expects to manufacture 5,000 monitors, the total costs would be ________.
$260,000
Samsung Mobile plans to launch a new phone with a unit cost of $270 and wants to earn a 10 percent markup on its sales. Samsung's markup price is ________.
$300
The total production costs at Kellner Machine Works are $87,000 out of which $45,000 represent fixed costs. Which of the following is representative of the variable costs incurred by the company?
$42,000
Which of the following is true with regard to value-added pricing?
Companies practicing value-added pricing differentiate their offers by attaching value-added features to offerings that, in turn, justify higher prices.
________ involves setting prices based on the costs for producing, distributing, and selling the product plus a fair rate of return for effort and risk.
Cost-based pricing
________ pricing uses buyers' perceptions of value as the key to pricing.
Customer value-based
________ pricing refers to offering just the right combination of quality and gratifying service at a fair price.
Good-value
________ involves charging higher prices on an everyday basis but running frequent promotions to lower prices temporarily on selected items.
High-low pricing
Which of the following statements about break-even analysis is true?
It is calculated by using variable costs, the unit price, and fixed costs.
PoolPak produces climate-control systems for large swimming pools. The company's customers are more concerned about service support for maintaining their systems than the initial price of the product. PoolPak specializes in and differentiates itself through both cutting-edge technologies used to build its high-value climate control systems as well as seamless quality service. PoolPak's prices are very high, but demand for its climate-control systems seems to be forever on the rise. This exemplifies ________.
a nonprice position
Companies that adopt value-added pricing ________.
attach value-added features and services to differentiate their offers and support their higher prices
Companies with lower costs ________.
can set lower prices that result in smaller margins but greater sales and profits
Experience-curve pricing assumes that ________.
competitors are weak and not willing to fight price cuts
Bon Vivant offers an assortment of exclusive French wines at incredibly low prices. These prices are neither limited-time offers nor special discounts, but represent the daily prices of products sold by Bon Vivant. This reflects Bon Vivant's ________ strategy.
everyday low pricing
Retailers such as Costco and Walmart charge a constant, daily low price with few or no temporary price discounts. This is an example of ________.
everyday low pricing
Milt Alden says that his line workers "know each product like the back of their hands," and that this knowledge helps the company keep its prices low. This indicates that Alden Manufacturing most likely benefits from the ________.
experience curve
As production moves up, the average cost per unit decreases because ________.
fixed costs are spread over more units
Azure Air, an airline company, offers attractive prices to customers with tighter budgets. A no-frills airline, it charges for all other additional services, such as baggage handling and in-flight refreshments. Which of the following best describes Azure Air's pricing method?
good-value pricing
When McDonald's and other fast food restaurants offer "value menu" items at surprisingly low prices, they are most likely using ________.
good-value pricing
John assured his venture capitalists an earning of 25 percent return on equity when he began his IT start-up. In order to achieve this result, he will most likely use which of the following pricing approaches?
target return pricing
Which of the following is an external factor that affects pricing decisions in a company?
the nature of the market
Which of the following is an internal factor that affects pricing decisions in a company?
the overall marketing strategy of the company
Which of the following is true with regard to price?
Price is the sum of all the values that customers give up to gain the benefits of having a product
A cell phone manufacturing firm produced 1,000 cell phones a day but believed that it could reasonably step up production to 2,000 cell phones a day. Consequently, it built a larger plant and installed efficient machineries and work arrangements to realize the projected output. Which of the following can most likely be inferred from this information?
The unit cost of producing 2,000 cell phones per day would be lower than the unit cost of producing 1,000 units per day.
RedFin, a company marketing deep-sea diving equipment, charges very high prices for its products. Despite the availability of many low-priced products in the market, customers seem to prefer RedFin, which has earned a reputation for selling high-quality products. This exemplifies ________.
a nonprice position
What sets the ceiling for product prices?
customer perceptions of the product's value
Effective ________ pricing involves understanding how much value consumers place on the benefits they receive from the product and setting a price that captures that value.
customer-oriented
Bruno Servers has decided to decrease its prices on its popular higher-range servers. The company can reasonably expect ________ to increase.
demand
The movie industry in a country is controlled by six large studios that receive 90 percent of the annual revenues from movies. This is an example of a(n) ________.
oligopolistic competition
Underpriced products ________.
produce less revenue than they would if they were priced at the level of perceived value
what sets the floor for product prices?
product costs
A decision to position the product on high-performance quality will mean that the ________.
seller must charge a higher price to cover higher costs
Elmo Inc., a global conglomerate, designed the ElBrush, an electric toothbrush. Sensing market demand for the electric toothbrush, Elmo started with an ideal selling price of $3 based on customer value considerations and then targeted costs to ensure that the price was met. This exemplifies ________.
target costing
A downward-sloping experience curve is indicative of ________.
the falling unit production cost of a company
Buyers are less price sensitive when ________.
the product they are buying is unique
The break-even volume is the point at which ________.
the total revenue and total cost curves intersect
In an effort to differentiate its offerings from its competitors, Pegasus Computers decided to add an extra USB port in all its laptops besides providing a free pair of Delphi power bass headphones with every Pegasus laptop. Although the additional features increased the price of the laptops by $500, Pegasus was confident that the strategy would help boost demand for its laptops substantially. This is an example of ________.
value-added pricing
A pharmaceutical company in Utah recently released a new and expensive anti-ulcer drug in the market. The company justifies the high price of the drug by claiming that it is highly effective for treating all kinds of ulcers. The company also claims that the new drug will help bring down the need for invasive surgeries, an additional benefit for patients. Which of the following pricing strategies is the pharmaceutical company most likely using in this instance?
value-based pricing
