Question 1

What makes up a product's market price?

Accepted Answer

A)   It is the same as the product's list price.
B)   It is the list price less any allowances and discounts that may be involved in the purchase.
C)   It is the list price less any discounts and allowances plus geographic considerations.
D)   It is the price that consumers pay using a credit card.E) None of the above
F) A) and B)

Question 2

What must demand curves be estimated based on?

Accepted Answer

A)   marketing research
B)   past practices in the industry
C)   profit maximization
D)   effective accounting proceduresE) C) and D)
F) None of the above

Question 3

A loss leader is a product priced below cost by a retailer that hopes the price will attract customers who will then buy other, regularly priced merchandise.

Accepted Answer

A) True 
 B)False

Question 4

What is an attempt to integrate promotional strategies within the marketing channel called?

Accepted Answer

A)   quantity discount
B)   rebate
C)   trade-in
D)   promotional allowanceE) B) and D)
F) All of the above

Question 5

What objectives are short-run or long-run profitability goals, usually stated as percentages of sales or investment?

Accepted Answer

A)   profit maximization
B)   volume
C)   target-return
D)   prestigeE) A) and C)
F) A) and B)

Question 6

A fitness club that advertises a special rate for customers who sign up during the first two weeks of January is using a promotional pricing strategy.

Accepted Answer

A) True 
 B)False

Question 7

What type of pricing is "Buy three shock absorbers and get the fourth free," as advertised by an auto repair shop, an example of?

Accepted Answer

A)   promotional
B)   variable
C)   one-policy
D)   product-lineE) A) and B)
F) A) and C)

Question 8

Customary prices are prices set on the basis of detailed calculations of product costs and contribution to profit margin.

Accepted Answer

A) True 
 B)False

Question 9

How would the terms be stated if a business was offering a cash discount of 5 percent if consumers pay the invoice within 30 days with the full face amount of the invoice due 30 days after that?

Accepted Answer

A)   5/30, net 60
B)   5/60, net 90
C)   5/15, net 45
D)   10/30, net 60E) C) and D)
F) A) and D)

Question 10

What is the price elasticity of demand for eggs if a 10 percent increase in the price of eggs results in a 5 percent decrease in the quantity of eggs demanded?

Accepted Answer

A)  0.1
B)  0.5
C)  1.0
D)  1.5E) B) and D)
F) B) and C)

Question 11

If foreign marketing costs are high and variable unit costs are used as the basis for pricing, a standard worldwide price may successfully be used.

Accepted Answer

A) True 
 B)False

Question 12

Cumulative quantity discounts are price reductions based on the volume of product purchased during a stated period of time.

Accepted Answer

A) True 
 B)False

Question 13

All exporters use cost-plus pricing methods to establish dual prices that fully allocate their true domestic and foreign costs to their products.

Accepted Answer

A) True 
 B)False

Question 14

What occurs when a company offers two or more complementary products and sells them for a single price?

Accepted Answer

A)   multiple packaging
B)   combination pricing
C)   protective pricing
D)   bundle pricingE) All of the above
F) None of the above

Question 15

Nonrecurring government and organizational purchases are generally characterized by a system of set prices to which the appropriate purchasing organizations have agreed.

Accepted Answer

A) True 
 B)False

Question 16

Even when artificially low prices are maintained for a period of time, it is rare for customers to expect that such prices are customary features of the product.

Accepted Answer

A) True 
 B)False

Question 17

The amount by which the average transportation charge exceeds the actual cost of shipping to a particular destination under postage-stamp pricing is called phantom freight.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following presents a major obstacle to using traditional price theory?

Accepted Answer

A)   estimating markups
B)   computing costs
C)   predicting revenues
D)   estimating demand curvesE) A) and B)
F) A) and C)

Question 19

A trade discount is a payment to channel members for performing marketing functions.

Accepted Answer

A) True 
 B)False

Question 20

What is a major problem facing company decision makers when setting transfer prices?

Accepted Answer

A)   how to determine the product-service attributes of the transfer
B)   when to complete the transfer
C)   how to assign the controllable costs to profit centres
D)   what price to actually charge the receiving profit centreE) All of the above
F) None of the above

Exam 16: Pricing Concepts and Strategies

Even when artificially low prices are maintained for a period of time, it is rare for customers to expect that such prices are customary features of the product.

Correct AnswerverifiedShow Answer

What is the price elasticity of demand for eggs if a 10 percent increase in the price of eggs results in a 5 percent decrease in the quantity of eggs demanded?

Correct AnswerverifiedShow Answer

What is a major problem facing company decision makers when setting transfer prices?

Correct AnswerverifiedShow Answer

If foreign marketing costs are high and variable unit costs are used as the basis for pricing, a standard worldwide price may successfully be used.

Correct AnswerverifiedShow Answer

All exporters use cost-plus pricing methods to establish dual prices that fully allocate their true domestic and foreign costs to their products.

Correct AnswerverifiedShow Answer

What occurs when a company offers two or more complementary products and sells them for a single price?

Correct AnswerverifiedShow Answer

A fitness club that advertises a special rate for customers who sign up during the first two weeks of January is using a promotional pricing strategy.

Correct AnswerverifiedShow Answer

Customary prices are prices set on the basis of detailed calculations of product costs and contribution to profit margin.

Correct AnswerverifiedShow Answer

What must demand curves be estimated based on?

Correct AnswerverifiedShow Answer

How would the terms be stated if a business was offering a cash discount of 5 percent if consumers pay the invoice within 30 days with the full face amount of the invoice due 30 days after that?

Correct AnswerverifiedShow Answer

Nonrecurring government and organizational purchases are generally characterized by a system of set prices to which the appropriate purchasing organizations have agreed.

Correct AnswerverifiedShow Answer

Cumulative quantity discounts are price reductions based on the volume of product purchased during a stated period of time.

Correct AnswerverifiedShow Answer

What type of pricing is "Buy three shock absorbers and get the fourth free," as advertised by an auto repair shop, an example of?

Correct AnswerverifiedShow Answer

What is an attempt to integrate promotional strategies within the marketing channel called?

Correct AnswerverifiedShow Answer

A loss leader is a product priced below cost by a retailer that hopes the price will attract customers who will then buy other, regularly priced merchandise.

Correct AnswerverifiedShow Answer

A trade discount is a payment to channel members for performing marketing functions.

Correct AnswerverifiedShow Answer

The amount by which the average transportation charge exceeds the actual cost of shipping to a particular destination under postage-stamp pricing is called phantom freight.

Correct AnswerverifiedShow Answer

Which of the following presents a major obstacle to using traditional price theory?

Correct AnswerverifiedShow Answer

What objectives are short-run or long-run profitability goals, usually stated as percentages of sales or investment?

Correct AnswerverifiedShow Answer

What makes up a product's market price?

Correct AnswerverifiedShow Answer

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