Question 1

Define price. Discuss its importance.

Accepted Answer

In the narrowest sense, price is the amo...

Question 2

________ involves setting prices based on the costs for producing, distributing, and selling the product plus a fair rate of return for effort and risk.

Accepted Answer

A)   Value-based pricing
B)   Competition-based pricing
C)   Cost-based pricing
D)   Penetration pricing
E)   Break-even pricing

Question 3

Explain break-even pricing.

Accepted Answer

Break-even pricing (target return pricin...

Question 4

Which of the following involves introducing less-expensive versions of established, brand-name products?

Accepted Answer

A)   markup pricing
B)   good-value pricing
C)   time-based pricing
D)   cost-based pricing
E)   target profit pricing

Question 5

Elmo Inc., a global conglomerate, designed the ElBrush, an electric toothbrush. Sensing market demand for the electric toothbrush, Elmo started with an ideal selling price of $3 based on customer value considerations and then targeted costs to ensure that the price was met. This exemplifies ________.

Accepted Answer

A)   competition-based pricing
B)   cost-plus pricing
C)   target costing
D)   everyday low pricing
E)   high-low pricing

Question 6

Prices have a direct impact on a firm's bottom line.

Accepted Answer

A) True 
 B)False

Question 7

Costs that change with the level of production are referred to as ________.

Accepted Answer

A)   fixed costs
B)   variable costs
C)   target costs
D)   total costs
E)   overhead costs

Question 8

Customer perceptions of the product's value set the floor for prices.

Accepted Answer

A) True 
 B)False  False

Question 9

Dips in the economy and the instant price comparisons made possible by the Internet have contributed to ________.

Accepted Answer

A)   decreased consumer price sensitivity
B)   increased consumer price sensitivity
C)   a less direct relationship between supply and demand
D)   low brand equity for luxury goods
E)   decreased brand loyalty

Question 10

Explain the concept of price floor.

Accepted Answer

Price floor represen...

Question 11

Which of the following is an external factor that affects pricing decisions in a company?

Accepted Answer

A)   the company's overall marketing strategy
B)   the nature of the market
C)   the organizational objectives of the company
D)   elements of the company's marketing mix
E)   the annual advertising budget of rival firms

Question 12

________ is the only element in the marketing mix that produces revenue.

Accepted Answer

A)   Price
B)   Product
C)   Place
D)   Fixed costs
E)   Variable costs A

Question 13

A company faces fixed costs of $100,000 and variable costs of $8 per unit. It plans to directly sell its product in the market for $12. How many units must it produce and sell to break even?

Accepted Answer

A)   20,000
B)   25,000
C)   30,000
D)   35,000
E)   40,000

Question 14

What is competition-based pricing?

Accepted Answer

Competition-based pricing refe...

Question 15

A pharmaceutical company in Utah recently released a new and expensive anti-ulcer drug in the market. The company justifies the high price of the drug by claiming that it is highly effective for treating all kinds of ulcers. The company also claims that the new drug will help bring down the need for invasive surgeries, an additional benefit for patients. Which of the following pricing strategies is the pharmaceutical company most likely using in this instance?

Accepted Answer

A)   target pricing
B)   markup pricing
C)   cost-based pricing
D)   value-based pricing
E)   break-even pricing

Question 16

A downward-sloping experience curve is indicative of a company's rapidly increasing production costs.

Accepted Answer

A) True 
 B)False

Question 17

The long-run average cost (LRAC)  curve indicates the ________.

Accepted Answer

A)   per unit cost of output in the long run
B)   projected total production costs of competitors
C)   variable costs incurred by a firm over time
D)   fixed costs incurred by a firm over the long term
E)   number of units the market will buy in a given time period, at different prices that might be charged

Question 18

John assured his venture capitalists an earning of 25 percent return on equity when he began his IT start-up. In order to achieve this result, he will most likely use which of the following pricing approaches?

Accepted Answer

A)   value-based pricing
B)   markup pricing
C)   EDLP
D)   customer-based pricing
E)   target return pricing

Question 19

Price decisions must be coordinated with product design, distribution, and promotion decisions to form a consistent and effective integrated marketing mix program.

Accepted Answer

A) True 
 B)False

Question 20

Under oligopolistic competition ________.

Accepted Answer

A)   the market consists of a single dominant seller
B)   the market consists of numerous small sellers
C)   the market consists of many buyers and sellers who trade over a range of prices rather than a single market price
D)   sellers are typically unresponsive to competitors' pricing strategies and marketing moves
E)   the market consists of only a few large sellers E

Exam 10: Pricing: Understanding and Capturing Customer Value

Define price. Discuss its importance.

Correct Answer
verified
In the narrowest sense, price is the amo...
View Answer

________ involves setting prices based on the costs for producing, distributing, and selling the product plus a fair rate of return for effort and risk.

Correct Answer
verified

Explain break-even pricing.

Correct Answer
verified
Break-even pricing (target return pricin...
View Answer

Which of the following involves introducing less-expensive versions of established, brand-name products?

Correct Answer
verified

Correct Answer
verified

Prices have a direct impact on a firm's bottom line.

Correct Answer
verified

Costs that change with the level of production are referred to as ________.

Correct Answer
verified

Customer perceptions of the product's value set the floor for prices.

Correct Answer
verified
False

Dips in the economy and the instant price comparisons made possible by the Internet have contributed to ________.

Correct Answer
verified

Explain the concept of price floor.

Correct Answer
verified
Price floor represen...
View Answer

Which of the following is an external factor that affects pricing decisions in a company?

Correct Answer
verified

________ is the only element in the marketing mix that produces revenue.

Correct Answer
verified
A

A company faces fixed costs of $100,000 and variable costs of $8 per unit. It plans to directly sell its product in the market for $12. How many units must it produce and sell to break even?

Correct Answer
verified

What is competition-based pricing?

Correct Answer
verified
Competition-based pricing refe...
View Answer

Correct Answer
verified

A downward-sloping experience curve is indicative of a company's rapidly increasing production costs.

Correct Answer
verified

The long-run average cost (LRAC) curve indicates the ________.

Correct Answer
verified

John assured his venture capitalists an earning of 25 percent return on equity when he began his IT start-up. In order to achieve this result, he will most likely use which of the following pricing approaches?

Correct Answer
verified

Price decisions must be coordinated with product design, distribution, and promotion decisions to form a consistent and effective integrated marketing mix program.

Correct Answer
verified

Under oligopolistic competition ________.

Correct Answer
verified
E

Exam 10: Pricing: Understanding and Capturing Customer Value

Define price. Discuss its importance.

Correct AnswerverifiedIn the narrowest sense, price is the amo...View AnswerShow Answer

________ involves setting prices based on the costs for producing, distributing, and selling the product plus a fair rate of return for effort and risk.

Correct AnswerverifiedShow Answer

Explain break-even pricing.

Correct AnswerverifiedBreak-even pricing (target return pricin...View AnswerShow Answer

Which of the following involves introducing less-expensive versions of established, brand-name products?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Prices have a direct impact on a firm's bottom line.

Correct AnswerverifiedShow Answer

Costs that change with the level of production are referred to as ________.

Correct AnswerverifiedShow Answer

Customer perceptions of the product's value set the floor for prices.

Correct AnswerverifiedFalse

Dips in the economy and the instant price comparisons made possible by the Internet have contributed to ________.

Correct AnswerverifiedShow Answer

Explain the concept of price floor.

Correct AnswerverifiedPrice floor represen...View AnswerShow Answer

Which of the following is an external factor that affects pricing decisions in a company?

Correct AnswerverifiedShow Answer

________ is the only element in the marketing mix that produces revenue.

Correct AnswerverifiedA

A company faces fixed costs of $100,000 and variable costs of $8 per unit. It plans to directly sell its product in the market for $12. How many units must it produce and sell to break even?

Correct AnswerverifiedShow Answer

What is competition-based pricing?

Correct AnswerverifiedCompetition-based pricing refe...View AnswerShow Answer

Correct AnswerverifiedShow Answer

A downward-sloping experience curve is indicative of a company's rapidly increasing production costs.

Correct AnswerverifiedShow Answer

The long-run average cost (LRAC) curve indicates the ________.

Correct AnswerverifiedShow Answer

John assured his venture capitalists an earning of 25 percent return on equity when he began his IT start-up. In order to achieve this result, he will most likely use which of the following pricing approaches?

Correct AnswerverifiedShow Answer

Price decisions must be coordinated with product design, distribution, and promotion decisions to form a consistent and effective integrated marketing mix program.

Correct AnswerverifiedShow Answer

Under oligopolistic competition ________.

Correct AnswerverifiedE

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In the narrowest sense, price is the amo...
View Answer

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Break-even pricing (target return pricin...
View Answer

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Price floor represen...
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Competition-based pricing refe...
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