MKT: Chapter 19

. Keystoning is: a. the practice of marking up prices by 100 percent b. a method used for determining the point of elasticity c. a plan for reducing marginal costs d. the practice of maintaining variable costs at one-half of total fixed costs e. a method of changing consumers' perceptions about price

A

Allstate has more than 1,500 price levels that are determined by complex algorithms that analyze 16 credit report variables, including late payments and card balances. Allstate is using a _____ to set prices. a. yield management system b. capacity correlation system c. service forecasting tools d. service management system e. capacity maintenance tool

A

An organization is using _____ when it sets its prices so that total revenue is as large as possible relative to total costs. a. profit maximization b. market share pricing c. demand-oriented pricing d. sales maximization e. status quo pricing

A

As long as the revenue of the last unit produced and sold is greater than the cost of the last unit produced and sold, a firm should: a. continue manufacturing b. not use formula pricing c. continue using price equilibrium d. consider using sales maximization pricing e. reach its break-even point very shortly

A

Central Bark is a dog resort where pets are pampered. Which of the following is the BEST example of one of its fixed costs? a. payment on the building used by Central Bark b. dog biscuits c. dog collars and leashes d. bubble bath e. advertisements in local magazines

A

Monthly output at Leisure-Time, Inc. changed from 12 to 13 prefabricated gazebos, and the total costs changed from $9,000 to $10,500. What is the marginal cost for this company? a. $1,500 b. $2,000 c. $1,200 d. $10,000 e. $12,000

A

Price is best described as: a. that which is given up in exchange to acquire a good or service b. money exchanged for a good or service c. the psychological results of purchasing d. the cost in dollars for a good or service as set by the producer e. the value of a barter good in an exchange

A

The Nest is a retail store owned and operated by an interior designer. The markup on all items in the store is 100 percent over cost (or double the cost). In this case we would say that the designer uses: a. keystoning b. target ROI pricing c. break-even pricing d. marginalizing e. double sourcing

A

The difference between the retailer's cost and the selling price is the _____. a. gross margin b. markup percentage c. profit d. keystone e. breakeven profit

A

The greater the number of different uses for a product, the more _____ demand tends to be. a. elastic b. inelastic c. unitary d. volatile e. stable

A

The most popular method used by wholesalers and retailers in establishing a sales price is _____ pricing. a. markup b. status quo c. formula d. marginal revenue e. break-even

A

What happens when demand is elastic? a. As price goes up, revenue goes down. b. As price goes down, revenue goes down. c. As price goes up, revenue goes up. d. As price goes up, revenue does not change. e. As price goes down, revenue does not change.

A

When Delta Airlines raises or lowers its prices on its Atlanta to Chicago route other airlines tend to make the same changes in their pricing. This is an example of _____ pricing. a. status quo b. target return c. market share d. predatory e. cost-plus

A

When Insight Research Associates quotes a marketing research project management will first estimate the cost to conduct the research and produce and deliver the final client report. The next step in determining the price is to add 30% to that cost estimate. This becomes the price estimate given to the potential research client. This suggests that Insight Research Associates uses a(n) _____ pricing objective. a. profit-oriented b. market share maximization c. status quo d. sales maximization e. supply-demand equalization

A

When the price of a product is set at a level where demand and supply are the same, _____ has been achieved. a. equilibrium b. stability c. leverage d. symmetry e. status quo

A

____ use complex mathematical software to profitably fill unused capacity. a. Yield management systems b. Capacity correlation systems c. Service forecasting tools d. Service management systems e. Capacity management software

A

_____ is equal to net profit after taxes divided by total assets. a. Return on investment b. Economic order quantity c. Target-on-sales d. Retained earnings e. Efficiency maximization

A

_____ pay for every activity of the company. a. Revenues b. Investments c. Retained earnings d. Profits e. Prices

A

A company using market share pricing has a _____ pricing objective. a. profit-oriented b. sales-oriented c. demand-oriented d. supply-oriented e. status quo

B

A cost that changes with the level of output is called a(n) _____ cost. a. liquidity b. variable c. fixed d. asset e. elastic

B

All of the following factors directly affect the elasticity of demand EXCEPT: a. other uses of a product b. inputs needed to manufacture the product c. availability of substitute goods d. price relative to a consumer's purchasing power e. product durability

B

Although many factors can influence price, the primary determinants are: a. costs of manufacturing and distribution b. the demand for the good and the cost to the seller c. demand by the consumer and perceived quality d. distribution and promotion strategies e. stage of the product life cycle and costs to the consumer

B

At Wal-Mart, Randi saw a bag of daffodil flower bulbs and a box of plant fertilizer. The items, which were sold together, retailed at $28.50, but were marked down to $19.99. The $19.99 is the: a. revenue b. price c. profit d. liquidity value e. amortized value

B

At a price of $1,192,057, the Bugatti Veyron may be the most expensive street legal car currently on the market today. Obviously, Bugatti is NOT using a _____ pricing objective in setting the price for this car. a. inelastic or supply-oriented b. market share or sales maximization c. profit maximization or target return on investment d. status quo or satisfactory profits e. demand-oriented or supply-oriented

B

At the end of the summer, Howard Nursery reduced the price on all of its plants, fertilizer, and potting soil by 50 percent in order to liquidate this inventory. What type of pricing strategy is being used in this example? a. supply oriented b. sales maximization c. target return on investment d. satisfactory profit e. profit maximization

B

Chad has calculated the sales volume at which his lemonade stand's costs equal revenue. Over dinner he announced to his family that he only needed to sell 50 glasses of lemonade at $5 per glass to cover all his costs (lumber and nails for the stand, lemons, sugar, etc.). Which important factor has Chad excluded from his analysis? a. fixed and variable cost determination b. consumer demand c. target return pricing d. break-even analysis e. market share

B

Critics claim bank ATMs take advantage of the _____ of customers who suffer a poverty of time and have a strong need for convenience. a. elasticity of demand b. inelastic demand schedule c. unitary supply and demand d. ROI characteristics e. supply characteristics

B

For a nail salon, the costs associated with the purchase of nail polish and other products like nail polish remover, sterilized equipment, laundry service for the towels, and the beverages given to customers, are all examples of _____ costs. a. marginal b. variable c. fixed d. promotional e. liquidity

B

If a product has high pricing power this would indicate a situation of: a. unitary demand b. inelastic demand c. elastic demand d. constant demand e. revenue maximization

B

Pierre's Ice Cream Company produces ultra-rich ice cream, which it sells in the Cleveland, Ohio area. Last year, it managed to exceed its target ROI for the current fiscal year. The following results were found on its financial statements: Gross Revenues: $250,000 Total Assets: $500,000 Gross Profits: $100,000 Total Liabilities: $200,000 Net Profits after Tax: $ 50,000 Owner's Equity: $300,000 What was the actual return on investment (ROI) for Parrish Farms? a. 6.67 percent b. 10 percent c. 22 percent d. 28 percent e. 100

B

The quantity of a product that will be sold at various prices for a specified period is called: a. market share b. demand c. supply d. value e. revenue

B

The two types of costs a marketer needs to consider when setting prices are: a. primary and secondary b. variable and fixed c. marginal and absolute d. short-term and long-term e. elastic and inelastic

B

Thompson Pool is known for quality pool installations, excellent customer service, and reasonable prices. If you want to have a Thompson pool you will have to wait about six months due to demand for their product. While Thompson could probably price their product higher, given the demand, they don't. Instead, they set price so that they earn a reasonable level of profits. This company seems to base its pricing policy on: a. profit maximization b. earning satisfactory profits c. creating retained earnings d. making the most money as possible e. decreasing consumer demand

B

When Apple Inc. originally introduced its iPhone it was priced at what many believed to be about as high as the market would allow. Within weeks Apple lowered the price of the iPhone. It appears that Apple Inc. entered the market with a _____ approach to pricing the iPhone. a. market share pricing b. profit maximization c. demand-oriented d. sales maximization e. status quo pricing

B

When price decreases and total revenue falls, demand is: a. elastic b. inelastic c. absolute d. unitary e. stable

B

Yield management systems are used to: a. determine the availability of product substitutes in complex industries that are experiencing rapid change b. profitably fill unused capacity c. predict necessary service levels to achieve revenue goals d. determine whether it is financially more feasible to buy a new product or repair a broken one e. create elastic demand for low-involvement products

B

_____ is the extra revenue associated with selling an additional unit of output. a. Average revenue b. Marginal revenue c. Marginal cost d. Net profit e. Average variable cost

B

_____ is the practice of marking up prices by 100 percent (or doubling the cost to set the selling price). a. Margin pricing b. Keystoning c. Mark-on adding d. Formula doubling e. Symmetrical pricing

B

. Bottles of Pure Hawaiian Air contain air that smells like the floral bouquet that greets tourists as they get off the plane in Hawaii. When a tourist shop began selling Pure Hawaiian Air, it charged $5 per bottle and could not keep up with the demand. It has since raised the price to $7. Now the shop is still selling all the bottles of Pure Hawaiian Air it carries, but the owner is not forced to reorder on a daily basis. The $7 price is probably a(n): a. supply schedule b. symmetrical price c. price equilibrium d. inventory equalizer e. inelastic price

C

All of the following statements about price are true EXCEPT: a. Price can relate to anything with perceived value, not just money. b. Price is that which is given up in an exchange to acquire a product. c. Price means the same thing to the consumer and the seller. d. The price paid is based on the satisfaction consumers expect to receive from a product. e. Customers are interested in obtaining a perceived reasonable price.

C

If a company's pricing objective is to meet the competition or to maintain existing prices, it is using _____ pricing. a. head-on b. target return on investment c. status quo d. market share e. demand-oriented

C

Mitch owns a pet boarding kennel. The monthly payment on the land he purchased for his kennel, the mortgage on his small office building, and his business license are all examples of _____ costs. a. marginal b. variable c. fixed d. promotional e. demand

C

Money that is left over after paying for company activities is called: a. return on investment b. a contribution margin c. profit d. net worth e. a current asset

C

Procter & Gamble dropped the price of Pringles Potato Chips in the Southeast due to price competition and consumer demand. As a result of the price reduction, Procter & Gamble increased unit sales and earnings by 10 percent due to: a. reduction in supply b. increases in both supply and demand c. demand being elastic d. demand being inelastic e. market share fluctuations

C

The price of the good or service is a key decision for a marketer because it most significantly and directly affects the product's: a. distribution b. costs c. demand d. promotion e. quality

C

When consumers are sensitive to price changes, _____ occurs. a. inelastic demand b. elastic supply c. elastic demand d. inelastic supply e. unitary elasticity

C

Which of the following statements about price is true? a. Price and revenue are synonyms. b. Price always equals some monetary figure. c. Price is not necessarily based on the satisfaction consumers receive from a product. d. High prices result in high profits. e. All of these statements about price are true.

C

Why are marketing managers finding it more difficult to set prices in today's environment? a. Inflationary and recessionary periods have made customers less price-sensitive. b. Fewer dealer and generic brands are available because the competition has been eliminated. c. The high rate of new-product introductions has led to careful reevaluation by consumers. d. Marketing managers are finding it difficult to compare prices between suppliers. e. Buyers are less informed and are less price-sensitive

C

_____ costs do not change as output is increased or decreased. a. Asset b. Variable c. Fixed d. Symmetrical e. Status quo

C

_____ occurs when an increase in sales exactly offsets a decrease in price so that total revenue remains exactly the same. a. Inelastic demand b. Functional elasticity of demand c. Unitary elasticity d. Highly elastic demand e. Fixed elasticity

C

. Which of the following would imply demand would be elastic? a. price is low relative to purchasing power b. nondurable product c. low inflation rate d. many substitute products e. all of these choices

D

An educational toy store can buy a world globe for $30. If the store owner sells the globe for $45, what is the markup based on the selling price? a. 15 percent b. 20 percent c. 25 percent d. 33 percent e. 50 percent

D

As a short-term pricing objective, _____ can be effectively used on a temporary basis to sell off excessive inventory. a. profit maximization b. profit-oriented pricing c. status quo pricing d. sales maximization e. market share pricing

D

At Wal-Mart, Randi saw a bag of daffodil flower bulbs and a box of plant fertilizer. The items, which were sold together, retailed at $28.50, but were marked down to $19.99. The retailer sold one at the $28.50 price and five at the $19.99. The retailer's revenue is: a. $8.51 b. $19. 99 c. $28.50 d. $128.45 e. $171.00

D

Cowboy Malone's Electric City pays a wholesaler $700 for a television and sells it to a customer for $1,500. The markup on the television is: a. $240 b. $160 c. $700 d. $800 e. $1,500

D

Dixie Furniture Company has recently moved to a new, larger location. At this new location, it has been unable to attract sufficient customers. Its owner does not have the cash to pay the current loan installment due on the building and inventory so he decided to reduce all merchandise prices by at least 50 percent for a weekend sale to earn enough to make his loan payment. His pricing objective can be classified as: a. market share maximization b. satisfactory profits c. asset maximization d. sales maximization e. target ROI

D

For convenience, pricing objectives can be divided into three categories. They are: a. refundable, competitive, and attainable b. perceived, actual, and unique-situational c. differentiated, niche, and undifferentiated d. profit oriented, sales oriented, and status quo e. monopolistic, fixed, and variable

D

The manager of a souvenir shop in Florida graphed the demand per week for fresh orange juice. The graph indicates a demand schedule that slopes downward and to the right. This graph indicates that the quantity of juice demanded increases as: a. cost increases b. supply decreases c. price increases d. price decreases e. supply increases

D

The owner of specialty kitchen retail store wants to determine what price she should put on a set of mixing bowls. They cost her $7. She desires a markup of 30 percent based on selling price. Which of the following is closest to the price she should charge her customers? a. $19 b. $12 c. $15 d. $10 e. $18

D

The point at which marginal cost and marginal revenue are equal always results in: a. maximization of elasticity b. maximization of revenue c. maximization of costs d. maximization of profits e. break-even equilibrium

D

_____ cost is the change in total costs associated with a one-unit change in output. a. Variable b. Intermittent c. Elastic d. Marginal e. Flex

D

_____ is a company's product sales as a percentage of total sales for that industry. a. Return on investment b. Profit share c. Revenue share d. Market share e. Contribution

D

. Consumers' responsiveness or sensitivity to changes in prices is known as: a. break-even b. equilibrium c. unitary revenue d. asymmetrical demand e. elasticity of demand

E

An educational toy store can buy a world globe for $30. If the store owner sells the globe for $45, what is the markup based on cost? a. 15 percent b. 20 percent c. 25 percent d. 33 percent e. 50 percent

E

At a price of $654,400 the SSC Ultimate Aero has been ranked as the third most expensive car in the world. The company is only planning to build twenty-five of the current model. If that matches the demand for the Ultimate Aero, then a state of _____has been achieved. a. symmetry b. marketing balance c. unitary economics d. commerce stability e. price equilibrium

E

Khimaira Farms sells handcrafted cookie cutters. When graphed, the demand schedule for Khimaira Farms brand cookie cutters forms a straight line. If at $3 per cutter, 500 cookie cutters are demanded, and at $4 per cutter, 450 cookie cutters are ordered, how many will be ordered at a price of $6 per cutter? a. 350 b. 450 c. 400 d. 333 e. 375

E

Most demand curves slope: a. horizontally b. upward and to the right c. downward and to the left d. vertically e. downward and to the right

E

Personal Touch produces and markets beaded purses. When graphed, the demand schedule for its purses is a straight line. If one purse costs $20, 5,000 beaded purses are sold. At $25, 4,500 purses are sold. How many beaded purses will be sold if the price per purse is increased to $30? a. 5,500 b. 4,250 c. 4,000 d. 3,750 e. 3,500

E

Profit maximization occurs when: a. total costs equals average fixed revenue b. average variable costs are larger than average total costs c. total costs equal total variable costs d. marginal variable costs equal average revenues e. marginal revenue equals marginal cost

E

Revenue: a. equals quantity sold times profit margin b. equals price minus costs c. equals return on investment d. is synonymous with profit e. equals price of goods times quantity sold

E

Sherrie is seven years old and wants to open a lemonade stand in her neighborhood. She is having a tough time deciding whether to base her pricing objectives on market share, dollar sales, or unit sales. Regardless of which she chooses, her pricing objective can be categorized as: a. status quo b. profit oriented c. need oriented d. cost oriented e. sales oriented

E

When Nesco brand food hydrators sold for $59.99, Nesco sold 90 dehydrators. When the company dropped the price of its dehydrators to $44.95, it sold 145 dehydrators. Demand for the food dehydrators appears to be: a. elastic b. inelastic c. unitary d. symmetrical e. asymmetrical

E

When a seller determines the selling price by adding to cost an amount for profit and expenses not previously accounted for, the seller is using _____ pricing. a. profit maximization b. demand-oriented c. break-even d. target return e. markup

E

When the NES Group lowered the price of its professional-grade meat slicers from $2,300 to $1,600, demand doubled from 4 units sold per month to 8 units per month. However, total revenue dropped. This is an example of: a. substitute goods b. unitary elasticity c. elastic demand d. consumer shortage e. inelastic demand

E

Which of the following is most likely to be a variable cost for an Internet retailer that sells spices, herbs, and seasonings to consumers? a. annual lease on mixer used to blend seasonings b. executive salaries c. rent for building where spices and herbs are repackaged for consumers d. workers' insurance e. postage for shipping spices and herbs

E

Which of the following statements about yield management systems (YMS) is true? a. The first use of YMS was in the U.S. car industry as it looked for ways to compete with imports. b. YMS eliminate the problem of simultaneous production and consumption from services. c. YMS cannot be used by any other businesses but services. d. YMS are complex pricing systems used to set equilibrium pricing points. e. YMS are mathematically complex systems to make use of underutilized capacity and reduce the cost of perishability.

E

Which of the following statements describes an advantage of status quo pricing? a. Status quo pricing is derived from actual costs of manufacturing. b. Status quo pricing maintains the organization's differential advantage. c. Status quo pricing is active, not reactive. d. Status quo pricing causes price wars. e. Status quo pricing requires little planning.

E

While the sales of the Apple iPhone have been great from the beginning, when Apple released its iPhone 3G cut the price of the iPhone for $399 to $199 sales exploded with one million iPhones sold the first weekend. Demand for the iPhone appears to be _____. a. unitary b. predictable c. synergistic d. inelastic e. elastic

E

The _____ is the quantity of a product that will be sold in the market at various prices for a specified time period, and _____ is the quantity of a product that will be offered to the market by suppliers at various prices for a specified period. a. demand; equity b. demand; supply c. supply; demand d. inventory; demand e. inventory; supply

b

_____ is the quantity of a product that will be offered to the market at various prices for a specified period. a. Distribution b. Supply c. Price d. Equilibrium e. Elasticity

b