mktg practice test 10

Tara is enrolled for spring semester at college. The tuition is $6,000, but she has a scholarship for $1,000 as well as a work-study grant of $1,500. The health fees and student activity fees are $150 for the semester. What is the final price that Tara will pay for the spring semester? $3,150 $6,150 $3,650 $2,650 $2,500

$3,650

The owner of a store that sells custom kitchen cabinets wishes to use a target return-on-sales pricing approach to establish a price for a typical section of cabinets. Assume that variable costs total $200 per unit, fixed cost is $44,000, and the storeowner desires a target profit of 20 percent return on sales at an annual volume of 400 cabinets. What price should be charged for a typical cabinet section? $445.50 $775.00 $311.00 $263.50 $387.50

$387.50

A company that manages apartments decides to buy 15 new dishwashers at a list price of $550 each as replacements for old dishwashers in a small apartment complex it owns. Because the company is buying more than 10 dishwashers, it is eligible for a $150-per-unit quantity discount. Financing charges total $20 per unit. The company gets $10 per dishwasher for the 15 dishwashers traded in. What is the final price the company will pay for each dishwasher (not the total cost)? $410 $730 $430 $400 $390

$410

Lady Marion Seafood, Inc., sells five-pound packages of Alaskan salmon. Assume that its unit variable cost per package is $30 and its fixed cost is $250,000. It wants a target profit of $38,000 based on a volume of 16,000 packages. What should the firm charge for a five-pound package of salmon? $40.00 $25.00 $48.00 $61.25 $33.94

$48.00

Which of the following statements about the price-setting process is most accurate? - Demand-oriented pricing approaches rely heavily on competitors' prices. - Sometimes pricing strategies overlap, and a seasoned marketer will consider several strategies when choosing an approximate price level. - When selecting a strategy for setting an initial price, it doesn't matter which one you use as long as you stick with it. - Skimming pricing is a competition-oriented pricing strategy. - Penetration pricing is the best pricing strategy for companies trying to meet the goals of a profit-oriented pricing approach.

- Sometimes pricing strategies overlap, and a seasoned marketer will consider several strategies when choosing an approximate price level.

A movement along a demand curve (up or down) for a product occurs ________, assuming that other factors such as consumer tastes, price and availability of substitutes, and consumer incomes remain unchanged. - when its demand and price are increased - when its demand is lowered or increased and the price offered for it correspondingly increases or decreases - at the break-even point - when its demand and price are lowered - when its price is lowered or increased and the quantity demanded for it correspondingly increases or decreases

- when its price is lowered or increased and the quantity demanded for it correspondingly increases or decreases

Tim Marlow, the owner of The Clock Works, wanted to know how many clocks he must sell in order to cover his fixed cost at a given price. Marloq knew that he had total fixed costs of $20,000 for equipment, taxes, and a bank loan. He also had a unit variable cost of $20 per clock for labor and materials. If the price Marlow charges for each of his clocks is $40, what is his break-even point quantity? 500 clocks 100 clocks 10,000 clocks 334 clocks 1,000 clocks

1,000 clocks

The break-even point (BEP) = [__________ ÷ (Unit price − Unit variable cost)]. Total cost Unit variable cost Total expense Total number of units produced or quantity Fixed cost

Fixed cost

Which of the following statements regarding price lining is most accurate? - Price lining assumes that demand is elastic at each price point but inelastic between price points. - In order for price lining to be effective, there should be at least five specified price points. - Price lining is the preferred pricing strategy for governmental contracts. - Price lining assumes that demand is inelastic at each price point but elastic between price points. - Price lining is the same as above-, at-, or below-market pricing.

Price lining assumes that demand is elastic at each price point but inelastic between price points.

A firm's profit equation demonstrates that profit equals Marginal revenue; Marginal cost. Price; Quantity. Total revenue + Marginal cost. Total cost + Total revenue. Total revenue - Total cost.

Total revenue - Total cost.

Which of the following would be an example of a constraint in Step 1 of the price-setting process? We're going to face some stiff competition. Experts are predicting a surge in global demand. We need to make allowances for large quantity orders. We should increase the price during the holiday shopping season. We can rely on our reputation for our other products in the line.

We're going to face some stiff competition.

Demand-oriented approaches weigh factors that underlie expected ________ more heavily than such factors as cost, profit, and competition when selecting a price level. stakeholder concerns total revenue prevailing prices customer tastes product substitutes

customer tastes

In some cases, manufacturers design products for different price points and retailers apply ________ to achieve the three or four different price points offered to consumers. approximately the same markup percentages progressively higher markup percentages above-, at-, or below-market pricing elasticity of demand pricing calculations different markup percentages depending on how long the item remains on their shelves

approximately the same markup percentages

Which of the following type of business is most likely to use cost-plus-percentage-of-cost pricing? space shuttle contractor power company insurance company real estate agency architect

architect

Delta Air Lines offers vacation packages that include airfare, car rental, and lodging. Delta Air is using a(n) ________ pricing strategy. odd-even standard markup prestige penetration bundle

bundle

If you were to buy one peach tree and one apple tree from the Stark Bros. fruit trees and landscaping catalog in two separate orders, you would pay a total of $109.99. However, if you order the peach and apple tree together in the same order, you pay only $89.99 each. When purchasing the two trees together, what pricing strategy does Stark Bros. employ? bundle pricing price lining product-line pricing prestige pricing discount pricing

bundle pricing

Marketing two or more products in a single package price is referred to as loss-leader pricing. bundle pricing. package pricing. multi-product pricing. tie-in pricing.

bundle pricing.

All of the following are examples of pricing objectives except market share. social responsibility. survival. unit sales. competitors' prices.

competitors' prices.

While pricing objectives frequently reflect corporate goals, pricing constraints often relate to stockholder demands. conditions existing in the marketplace. an organization's code of ethics. the financial realities within the organization itself. political ideology.

conditions existing in the marketplace.

Standard markup pricing is considered to be a ________ approach to pricing. competition-oriented service-oriented profit-oriented cost-oriented demand-oriented

cost-oriented

Consumers buy water and soda from vending machines. Traditionally, the price of each of these products is about $1.25. If a marketer charges a significantly higher price for such products dispensed by vending machines, such as $2.00 per item, sales are likely to decline. In order to avoid declines in sales, marketers tend to be very consistent in the prices they charge for vending machine products. This is an example of marketers employing a ________ strategy. customary pricing loss-leader pricing penetration pricing skimming pricing below-market pricing

customary pricing

Southern gardeners normally pay $5 for a two-cubic-foot bag of pine bark mulch that they buy at their local gardening-supply and home-improvement stores to keep the weeds down in their gardens. If the price being charged by a retailer is not within a narrow range that gardeners feel is appropriate, they will use substitutions—newspaper, grass clippings, or some other kind of covering. When pricing pine bark mulch, a garden-supply or home-improvement retailer should use penetration pricing. at-market pricing. customary pricing. loss-leader pricing. bundle pricing.

customary pricing.

To be successful, odd-even pricing depends on a manufacturer's costs. competitors' price assumptions. a retailers' ranges of prices. the wholesalers' markups. customers' perceptions of price.

customers' perceptions of price.

To increase value the most, marketers should do nothing and let the perceived value of the item increase as it matures in its life cycle. decrease benefits. decrease benefits and increase price. decrease price and increase benefits. decrease price and decrease benefits.

decrease price and increase benefits.

There are a lot of skateboards on the market, but when it was launched the BMW Streetcarver was the only one with stabilizers and wheel design based on BMW's automobiles. This technology gave the BMW Streetcarver better control at high speeds and around sharp turns than any other brand. The skateboard was priced at $495, which left many consumers (especially young males) who might have wanted to buy the Streetcarver unable to afford it. This inability to pay for the high-priced BMW-made skateboard shows the effect of ________ on sales. supply factors barter factors macroeconomic environmental factors exchange parameters demand factors

demand factors

Price lining is considered to be a ________ approach to pricing. competition-oriented service-oriented profit-oriented demand-oriented cost-oriented

demand-oriented

A skimming pricing policy is likely to be most effective when (1) ________; (2) the high initial price will not attract competitors; (3) lowering the price has only a minor effect on increasing the sales volume and reducing the unit cost; and (4) customers interpret the high price as signifying high quality. - enough prospective customers are willing to buy immediately at the high initial price to make these sales profitable - consumers tend to be price-sensitive - a lower price will significantly reduce unit costs - consumers perceive your product to be similar to other products in the market - it will be easier to set measurable sales unit goals

enough prospective customers are willing to buy immediately at the high initial price to make these sales profitable

The retail price of mobile phones (unsubsidized) has decreased from $4,000 in 1983 when Motorola commercialized the device, to less than $99 today as the volume increased from zero to millions of units sold. This is due in large part to which type of pricing approach? prestige pricing skimming pricing customary pricing odd-even pricing experience curve pricing

experience curve pricing

Which of the following is a cost-oriented approach to pricing? bundle pricing prestige pricing skimming pricing loss-leader pricing experience curve pricing

experience curve pricing

Demand for a product is likely to be more price elastic if it has many substitutes. is considered a necessity. requires a small cash outlay. has few substitutes. is nondiscretionary.

has many substitutes.

Which of the following is the fourth step in setting a final price for a product? determine cost, volume, and profit relationships set list or quoted price select an approximate price level scan competitors for prices of similar products or services identify pricing objectives and constraints

select an approximate price level

George and Alice Renfro decided to start a family business in 1990 to produce chowchow, a Southern regional food. To determine how they would price the chowchow, the Renfros had to examine (1) the demand for the product (e.g., would people rather eat homemade or store-bought?); (2) the costs of the jars for and bottling of the chowchow; and (3) and the cost to distribute the product to area grocery stores. For the Renfros, Step 1 of their price-setting process consists of estimating break-even points and revenue points. identifying pricing constraints. selecting an approximate price level. determining cost, volume, and profit relationships. setting the list price.

identifying pricing constraints.

According to the price equation, final price equals list price minus ________ plus extra fees. trade-ins profits incentives and allowances taxes commissions

incentives and allowances

Given that a firm's profit is high enough for it to remain in business, an objective may be to ________, which will in turn lead to increases in market share and profit. decrease unit volume while maintaining price continue with previous policies that seem to be working increase research and development funding for new product line extensions increase the commitment to social responsibility increase dollar sales revenue

increase dollar sales revenue

When Amazon introduced the Kindle Fire tablet device at $199 while Apple was selling the lowest price iPad for $499, Amazon was using a ________ pricing strategy. price lining BOGO skimming loss-leader penetration

penetration

When Hallmark cards introduced a line of 99-cent cards (about half the price of the previously least expensive cards it sold), the greeting card company was trying to appeal to a mass market that was price-sensitive. Hallmark was using a(n) ________ pricing strategy. prestige target ROI skimming penetration experience-curve

penetration

A Patek Philippe Sky Moon Tourbillion men's wristwatch is among the most expensive in the world, costing more than $1.5 million in 2013. This is an example of a ________ strategy. loss-leader pricing target pricing prestige pricing penetration pricing bundle pricing

prestige pricing

From a marketing viewpoint, ________ is the money or other considerations (including other products and services) exchanged for the ownership or use of a product or service. a tariff value price barter currency

price

All of the following are synonyms for price except a premium. barter. a commission. profit. tuition.

profit.

Target return-on-investment (ROI) is frequently used by business-to-business markets. small privately owned firms. supermarkets. contractors. public utilities.

public utilities.

Target return-on-sales pricing refers to - setting prices to achieve a profit that is a specified percentage of the sales volume. - adjusting the price of a product so it is in line with that of its largest competitor. - setting a price based on a specific annual dollar target profit volume. - adding a fixed percentage to the cost of all items in a specific product class. - setting the price of a line of products at a number of different price points.

setting prices to achieve a profit that is a specified percentage of the sales volume.

Creative Quilts Studio sells hundreds of colors and types of fabric and thread. To price its inventory, the owners add 50 percent to the cost of each bolt of fabric and every spool of thread. What is this pricing approach called? flexible pricing cost-plus pricing target return-on-sales pricing standard markup pricing customary pricing

standard markup pricing

Which of the following pricing techniques results in the manufacturers deliberately adjusting the composition and features of a product to achieve the desired price for consumers? standard markup pricing experience curve pricing target pricing cost-plus fixed-fee pricing cost-plus percentage-of-cost pricing

target pricing

The Swedish manufacturer of Asko dishwashers concluded that consumers would be willing to pay approximately $989 for a dishwasher that was quieter than any other dishwasher on the market. Based on this price, Asko determined the margins that would have to be given to wholesalers and retailers to arrive at the $989 retail price. Asko used target pricing. price lining. cost-plus pricing. customary pricing. prestige pricing.

target pricing.

Penetration pricing is intended to appeal to which market? the same markets as those targeted with a skimming pricing strategy price-insensitive markets the mass market specialty product markets highly selective, quality-seeking consumers

the mass market

The particular type of competition dramatically influences the range of price competition and, in turn, the degree of involvement with each of the organization's stakeholders. the nature of product differentiation and extent of on-hand inventory. the relationship between product lines and product classes. the degree of involvement with both retailers and wholesalers. the nature of product differentiation and extent of advertising.

the nature of product differentiation and extent of advertising

Which of the following is an example of a price? operating costs tuition liquidity stockholders' equity value

tuition

When Pizza Hut announced it was going to add 25 percent more toppings to its Meat Lover's line of pizzas without increasing prices, what consumer motivation was it appealing to? quality value price cost appearance

value

Airlines, hotels, and car rental firms all engage in ________ by varying prices based on time, day, week, or season to match supply and demand. bundle pricing prestige pricing skimming pricing yield management pricing target pricing

yield management pricing

Charging different prices to maximize revenue for a set amount of capacity at any given time is referred to as demand backward pricing. penetration pricing. target pricing. yield management pricing. skimming pricing.

yield management pricing.