chapter 11 true/false

a discount is a reduction in price to the customer

true

changes in price strategy should be made as a result of periodic systematic review

true

markdown means a business lowers its prices by a certain percentage

true

markup is the amount added to the cost of an item to cover expenses and ensure profit

true

penetration pricing attempts to build sales volume by charging lower initial prices

true

price skimming involves charging a high initial price for new products to recover cost or maximize profits as soon as possible

true

prices set too low create the perception in customers minds of low value

true

in order to make a profit, prices must be set so they exceed costs and expenses

true.

market share can be gained through both price strategy and non- price marketing strategy

true.

technological innovations can affect prices directly and indirectly

true.

the law of supply and demand infers that if the demand for your product is low and the supply is high, you can get a high price

false. demand high--- supply low---high price

break-even point occurs when sales equal cost minus the expenses of making or distributing a product

false. gain form economic = cost

it is legal for a business to sell the same product to different customers at different prices

false. it is illegal ( the Clayton act and Robinson Patman act)

special market circumstances such as a heat wave provide an opportunity for permanent increases in prices for some businesses

false. temporary

odd/even pricing uses old prices ($39.95) to suggest higher quality and even prices ($40.00) to suggest bargains

false. the 39.95 suggests the bargain and the 40.00 suggest higher equality

psychological pricing, prestige pricing and price lining are all promotional pricing techniques

false. there all psychological pricing techniques