marketing chapter 14 practice test

in the trucking industry, demand for fuel remains relatively stable even when the price increases, indicating that demand for fuel in this segment is elastic. inelastic. price-sensitive. expandable flexible.

inelastic If a firm must raise prices, it is helpful to do so for inelastic products or services, because in such a market, fewer customers will stop buying or reduce their purchases. However, if the products are inelastic, lowering prices will not appreciably increase demand; customers just don't notice or care about the lower price.

#9 math problem

math

Sometimes reactions to prices in oligopolistic markets can result in a ________Blank, which occurs when two or more firms compete primarily by lowering their prices. recession price war lawsuit profit-oriented strategy competitor-oriented strategy

price war

Customer orientation and competitor orientation strategies are examples of which of the five Cs of pricing? company objectives competition customers costs channel members

Company objectives Company objectives include profit orientation, sales orientation, competitor orientation, and customer orientation.

________Blank indicates that the demand for related products like peanut butter and jelly can be either positively or negatively related. The income effect The substitution effect Cross-price elasticity Complementary products effect The supply curve

Cross-price elasticity Cross-price elasticity is the percentage change in the quantity of a product demanded compared with the percentage change in price in a related product. For complementary products, demand is positively related, such that they rise or fall together. For substitute products, changes in demand are negatively related.

The most common form of competition is ________Blank, in which many firms compete for customers in a given market but with differentiated products. oligopolistic competition market saturation pure competition competitive parity monopolistic competition

Monopolistic competition occurs when many firms compete for customers in a given market but their products are differentiated. When so many firms compete, product differentiation rather than strict price competition tends to appeal to consumers. This is the most common form of competition.

________Blank occurs when one or more firms collude to control prices. Predatory pricing Price discrimination Bait-and-switch pricing Price fixing Loss-leader pricing

Price fixing

For the sake of expediency, marketers creating a ________Blank assume that the firm will not increase its expenditures on advertising and that the economy will not change in any significant way. price point analysis break-even analysis demand curve product curve price elasticity curve

demand curve Explanation A demand curve shows how many units of a product or service consumers will demand during a specific period of time at different prices. Although they are called "curves," demand curves can be either straight or curved. For the sake of expediency, marketers creating a demand curve assume that the firm will not increase its expenditures on advertising and that the economy will not change in any significant way.

In a(n) ________Blank demand scenario, relatively small changes in price will generate fairly large changes in the quantity demanded. elastic inelastic target profit target return competitive parity

elastic In general, the market for a product or service is price sensitive, or elastic, when the price elasticity is less than -1; that is, when a 1 percent decrease in price produces more than a 5 percent increase in the quantity sold. In an elastic scenario, relatively small changes in price will generate fairly large changes in the quantity demanded, so if a firm is trying to increase its sales, it can do so by lowering prices.

Open Road Bicycles has chosen a market penetration strategy. As sales continue to grow, the company's costs continue to drop, allowing even further reductions in the price. This is due to markdowns. price lining. seasonal discounts. improvement value. experience curve effects.

experience curve effects.

for her new baby-goods store, Christie has chosen ________Blank because it attracts two distinct market segments: those who are not price sensitive and are willing to pay the "high" price and more price-sensitive customers who wait for the "low" sale price. cost-based pricing high/low pricing predatory pricing EDLP competitor-based pricing

high/low pricing Explanation High/low pricing strategy relies on the promotion of sales, during which prices are temporarily reduced to encourage purchases. High/low sellers can also create excitement and attract customers through the "get them while they last" atmosphere that occurs during a sale.

Devon intends to set a very low price for one of his company's products in hopes of driving the competition out of business. Devon is engaged in loss leader pricing. gray market pricing. predatory pricing. competitive parity. the substitution effect.

predatory pricing. Predatory pricing occurs when a firm sets a very low price for one or more of its products with the intent to drive its competition out of business; illegal under both the Sherman Antitrust Act and the Federal Trade Commission Act.

Sea Breeze Caribbean Cruise Lines deliberately prices its vacation packages above the prices set for competing products, to capture those customers who always shop for the best or for whom price does not matter. Sea Breeze is using target return pricing. target profit pricing. status quo pricing. competitive parity. premium pricing.

premium pricing. When a firm deliberately prices a product above the prices set for competing products to capture those customers who always shop for the best or for who price does not matter, it is using premium pricing.

in the case of an exclusive product like a Lamborghini, the higher the price, the greater the status associated with it and the greater the exclusivity because fewer people can afford to purchase it. The Lamborghini represents a ________Blank product. status quo prestige predatory reference substitute

prestige Consumers purchase prestige products for their status rather than their functionality. For prestige products or services, a higher price may lead to a greater quantity sold, but only up to a certain point.

A pizza parlor located on campus offers a student rate for its pizza lunch special. This is a form of predatory pricing and is legal. predatory pricing and is illegal. bait-and-switch pricing and is legal. price discrimination and is illegal. price discrimination and is legal

price discrimination and is legal There are many forms of price discrimination, but only some of them are considered illegal under the Clayton Act and the Robinson-Patman Act. The Robinson-Patman Act does not apply to sales to end consumers, at which point many forms of price discrimination occur. Offering a different price to students for pizza is a form of price discrimination but is perfectly acceptable under federal law since it is aimed at consumers.

Which of these factors will tell Chao how changes in the price of her line of evening gowns will affect the quantity of gowns demanded? break-even analysis competitive parity target return pricing market-oriented pricing price elasticity of demand

price elasticity of demand Explanation Price elasticity of demand measures how changes in price affect the quantity of the product demanded. Specifically, it is the ratio of the percentage change in quantity demanded to the percentage change in price.

When Josh bought his new iPhone upon its release, the phone cost $999. Since he has high company loyalty and loves technological innovation, he bought the phone immediately even though he knew within a couple of years, the phone would be significantly less expensive. This is an example of what type of pricing strategy for Apple? price skimming penetration price strategy reference price high/low pricing everyday low pricing

price skimming Explanation In many markets, and particularly for new and innovative products or services, innovators and early adopters are willing to pay a higher price to obtain the new product or service. This strategy, known as price skimming, appeals to these segments of consumers who are willing to pay the premium price to have the innovation first.

Standardized products such as grains and mineral products, which customers perceive as substitutable, are characteristic of monopolies. oligopolies. pure competition. competitive parity. monopolistic competition.

pure competition. In pure competition, there are a large number of sellers of standardized products or commodities that consumers perceive as substitutable, such as grains, gold, meat, spices, or minerals. In such markets, price usually is set according to the laws of supply and demand.

dominic's computer repair service is entering a new market and he plans to set prices to take sales away from the established market leader, even though it will mean profits might suffer. This goal corresponds to which company objective? profit orientation sales orientation competitor orientation customer orientation market orientation

sales orientation Firms using a sales orientation to set prices believe that increasing sales in a particular situation will help the firm more than will increasing profits.

An office supply retailer will match competitor prices for customers who bring in proof that a particular product is being sold at a lower price by a competitor, thus using premium pricing. competitive parity. status quo pricing. target return pricing. target profit pricing.

status quo pricing. Explanation Status quo pricing is a competitor-oriented strategy where a company changes prices to meet those of the competition.

Hilda's company makes gluten-free frozen desserts and has just received a large order from a local supermarket chain. This change in the company's production volume will affect Hilda's profit margins. variable costs. marketing outlays. contribution per unit. the break-even point.

variable costs. Variable costs are those costs—primarily labor and materials—that vary with production volume. As a firm produces more or less of a good or service, the total variable costs increase or decrease at the same time.