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Exam 13: Pricing Concepts for Establishing Value

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Question 41

Multiple Choice

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The contribution per unit is:

A) price minus total costs.
B) price minus total variable cost.
C) price minus variable cost per unit.
D) total revenue minus total cost.
E) break-even quantity divided by total fixed costs.

F) A) and E)
G) A) and D)

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Question 42

Multiple Choice

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When Apple Computer Company introduced the iPhone--a combination phone,MP3 player,and Internet access device--in 2007,it was priced at $499,considerably higher than either the iPod or competing cell phones.Apple was probably pursuing a __________ pricing strategy.

A) market penetration
B) slotting allowance
C) price fixing
D) reference price
E) skimming

F) D) and E)
G) A) and B)

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Question 43

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A study found that,among addicted smokers,a 10 percent increase in the price of cigarettes resulted in a 2 percent decrease in quantity demanded.For these consumers,cigarettes have a(n) __________ price elasticity demand.

At the break-even point,profits are maximized.

A customer orientation toward pricing explicitly invokes the concept of:

Near the end of the summer season,Sergio still has a large inventory of bathing suits.He needs to sell them rather than holding them over till next season,because colors and styles often change.He plans to offer them at 30 percent off the retail price.Sergio hopes that demand for bathing suits at the end of the season is:

According to a typical demand curve,the higher the price:

The key to successful pricing is to match the product with the consumer's perception of value.

Sales of national brands of orange juice tend to increase when the economy is doing well,while sales of generic orange juice increase when the economy is not doing well.Among industry members this is called the "orange juice indicator." This is an example of how ___________ impacts demand for products.

Karen initially charged $80 for an hour-long massage and averaged 20 clients per week.When she raised her price to $100,the number of massages decreased to 15 per week.What is the price elasticity of demand for her service?

Bernard's firm has set corporate direction to become one of the leaders in each of its significant market segments.It was Bernard's job to examine the pricing to determine how to maximize market share,even at the expense of profits in the short run.What kind of company objective would guide Bernard's effort?

To discourage consumers from buying in gray markets,some manufacturers have:

Ryan gave the manager of his convenience store a set of binoculars so she could see the gasoline prices charged by the other convenience store at that intersection.Ryan told the manager to always match the gasoline prices of the other store.Ryan is using a __________ pricing strategy.

The commercial airline industry is considered what type of market?

Fenton has always used standard markups to determine the prices for his clothing products.You are advising him to change his pricing strategy.What advice would you give Fenton?

When Ursula decides how to price new products in her gift store,she measures the value of her product offerings against those of the other stores in her area.Ursula uses a __________ pricing strategy.

It is the responsibility of __________ to determine the ethical approach to setting prices so consumers find value and the firm can make a profit.

Historically,prices were:

A demand curve is built assuming that:

Dan is especially price sensitive.He has been known to line up on "Black Friday" (the day after Thanksgiving) at 4 a.m.in order to be among the first to buy sale items.Dan would likely respond to a __________ pricing strategy.