Ch. 10 Quiz Questions
If demand hardly changes with a small change in price, the demand is ________. A. highly elastic B. variable C. derived D. inelastic E. negative
inelastic
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 ________. A. $450,000 B. $350,000 C $650,000 D. $800,000 E. $950,000
$650,000
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? A. 40,000 B. 30,000 C. 25,000 D. 20,000 E. 35,000
25,000
Which of the following statements is true regarding costs? A. Totals costs are the sum of long-run average costs and short-run average costs. B. Costs do not vary with different levels of production. C. Variable costs vary directly with the level of sales. D. Average cost tends to decrease with accumulated production experience. E. Experience curve pricing is a low risk strategy.
Average cost tends to decrease with accumulated production experience
Which of the following correctly identifies the three major pricing strategies used by marketers? A. Customer valuedash-based pricing, revenue-based pricing, and profit-based pricing B. Customer valuedash-based pricing, cost-based pricing, and profit-based pricing C. Customer valuedash-based pricing, cost-based pricing, and revenue-based pricing D. Customer valuedash-based pricing, revenue-based pricing, and competition-based pricing E. Customer valuedash-based pricing, cost-based pricing, and competition-based pricing
Customer valuedash-based pricing, cost-based pricing, and competition-based pricing
Which factor sets the ceiling on setting a product's price? A. Revenue B. Customer's value perceptions C. Competitors D. Demand E. Company costs
Customer's value perceptions
Which of the following statements about price is correct? A. Marketers do not a have lot of flexibility in setting and changing price. B. Pricing is not a problem for marketing executives. C. Price is not an important competitive asset. D. Prices have no impact on a firm's bottom line. E. Customers have put increasing pricing pressures on many companies.
Customers have put increasing pricing pressures on many companies
Which of the following is true regarding the price-demand relationship? A. If demand is inelastic, a small change in price will result in a large change in demand. B. Price elasticity measures how responsive price will be to a change in demand. C. A demand curve shows the number of units a company will produce in a given time period at different prices that might be charged. D. If demand is elastic, sellers will consider lowering their price. E. Demand and price are directly relatedlong dash—the higher the price, the greater the demand.
If demand is elastic, sellers will consider lowering their price
Which of the following statements regarding customer value-based pricing is correct? A. This strategy is seldom used because buyers rarely consider perceived value when evaluating a product's price. B. Using this strategy, marketers first design the product and marketing program, then set the price. C. In using this strategy, companies often find it hard to measure the value customers attach to their product. D. Customer valuedash-based strategy begins with determining product costs. E. Using this strategy, marketers must convince buyers that the product's value at that price justifies its purchase.
In using this strategy, companies often find it hard to measure the value customers attach to their product
Which type of market consists of many buyers and sellers trading over a range of prices rather than a single market price? A. Uniform commodities B. Pure monopoly C. Monopolistic competition D. Oligopolistic competition E. Pure competition
Monopolistic competition
Which factor sets the floor on setting a product's price? A. Revenue B. Demand C. Customer's value perceptions D. Competitors E. Product costs
Product costs
In which type of market does no buyer or seller have much impact on setting the going market price? A. B2B market B. Monopolistic competition C. Oligopolistic competition D. Pure monopoly E. Pure competition
Pure competition
What is target costing? A. Setting a price and then setting costs that will ensure that the price is met B. Basing price on customer perceptions of cost C. Pricing products without any consideration to costs D. Designing a product, then determining its cost and price E. Setting acceptable costs and then setting the price
Setting a price and then setting costs that will ensure that the price is met
How is price determined using cost-plus pricing? A. The price is set by adding a standard mark-up to the cost of the product. B. The price is set by determining the customer's value perceptions. C. The price is set based on demand. D. The price is set so that total revenue covers total costs. E. The price is set based on competitor's prices.
The price is set by adding a standard mark-up to the cost of the product
New, premium movie theaters offer features such as online reserved seating, high-backed leather executive chairs with armrests and footrests, the latest in digital sound and super-wide screens, and other amenities for which they charge a higher price. This is an example of which type of pricing? A. Value-added pricing B. EDLP pricing C. Cost-plus pricing D. High-low pricing E. Break-even pricing
Value-added pricing
DivetheBlue, 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 DivetheBlue, which has earned a reputation for selling high-quality products. This exemplifies ________. A. a nonprice position B. a pure monopoly C. break-even pricing D. target costing E. an oligopoly
a nonprice position
Companies with lower costs ________. A. usually market products with inferior quality, thereby justifying the low selling price B. usually set higher prices that result in higher margins C. specialize in selling products with value-added features D. tend to overprice products owing to their monopolistic advantage E. can set lower prices that result in smaller margins but greater sales and profits
can set lower prices that result in smaller margins but greater sales and profits
The perceived value of different product offers can be reasonably assessed by ________. A. conducting a SWOT analysis B. preparing demand curves C. collecting data about competitors' offers D. conducting surveys and experiments E. setting a benchmark for product quality
conducting surveys and experiments
Which of the following processes does value-based pricing reverse? A. high-low pricing B. value-added pricing C everyday low pricing D. cost-based pricing E. good-value pricing
cost-based pricing
Which of the following shows the number of units the market will buy in a given time period, at different prices that might be charged? A. supply curve B. demand curve C. break-even pricing D. target costing E. learning curve
demand curve
Underpriced products ________. A. produce more revenue than they would if they were priced at the level of perceived value B. are characterized by rapidly declining demand C. mostly offer higher value than those with a high markup price D. sell poorly in the global marketplace E. produce less revenue than they would if they were priced at the level of perceived value
produce less revenue than they would if they were priced at the level of perceived value
Price is the only part of the marketing mix that __________. A. incurs costs B. produces revenue C. attracts buyers D. is defined by the consumer E. does not play a role in creating customer value
produces revenue
As a manufacturer increases the price, ________. A. efficiency drops B. the profit margin shrinks C. competition is minimized D. the total costs increase E. the break-even volume drops
the break-even volume drops
Internal factors that affect pricing include __________. A. the company's overall marketing strategy, objectives, and marketing mix B. the nature of the market, demand, and the economy. C. the company's overall marketing strategy, the nature of the market, and demand. D. the company's overall marketing strategy, objectives, and the nature of the market E. the company's overall marketing strategy, objectives, and demand
the company's overall marketing strategy, objectives, and marketing mix
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 ________. A. $60,000 B. $500,000 C. $420,000 D. $200,000 E. $260,000
$260,000