Quiz 5

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

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 of product bundle pricing?

It promotes the sale of products that consumers might not otherwise buy.

________ is the only element in the marketing mix that produces revenue.

Price

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.

Which of the following price adjustment strategies involves reducing prices to reward customer responses such as volume purchases, paying early, or participating in sales-support programs?

discount and allowance pricing

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 ________ pricing strategy.

everyday low

The break-even volume is the point at which ________.

the total revenue and total cost curves intersect

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

________ pricing uses buyers' perceptions of value as the key to pricing.

Customer value-based

Which of the following is true of optional-product pricing?

It involves pricing products that can be added to the base product.

Why is markup pricing most likely impractical?

The method ignores demand and competitor prices.

Which of the following is true of product line pricing?

The price steps take cost differences between products in the line into account.

Which of the following is true of value-based pricing?

The targeted value and price drive decisions about what costs can be incurred and the resulting product design.

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 machinery 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.

An ________ refers to promotional money paid by manufacturers to retailers in return for an agreement to feature the manufacturer's products in some way.

allowance

Companies with lower costs ________.

can set lower prices that result in smaller margins but greater sales and profits

Multiprint, a printer manufacturing firm, sells ink cartridges for each of its specific models. Only Multiprint cartridges are compatible with Multiprint printers, and no two models share the same specifications. What type of pricing does Multiprint use?

captive product pricing

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

Department stores such as Kohl's and Macy's practice high-low pricing by ________.

having frequent sale days for store credit-card holders

In a bid to attract more customers in a market that has several competitors, Barrymore's Bakery slashed the prices of all its products by 50 percent. Managers at the firm reasoned that lower prices would draw in even more customers, making up for the reduction in price several times over. Which of the following pricing strategies are they using?

market-penetration pricing

Companies facing the challenge of setting prices for the first time can choose between two broad strategies: market-penetration pricing and ________ pricing.

market-skimming

Midnight Magic, a perfume manufacturing company, plans to release a new fragrance during the holiday season at $99 per bottle. The company intends to bring the price down to $49 within six months of its release to attract buyers who couldn't afford the initial price. Which of the following pricing strategies is Midnight Magic using?

market-skimming pricing

Which of the following is a price adjustment strategy that considers how a customer's perception of a product is influenced by its price?

psychological pricing

The experience curve reveals that ________.

repetition in production enhances efficiency