100 + MCQs_Pricing Considerations and Approaches

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1.
The price of an executive is a
_____, the price of a salesperson is a _____, and the price of a worker is a
_____.

a.
commission; wage; salary

b.
wage; commission; salary

c.
salary; wage; commission

d.
salary; commission; wage

2.
_____ is the amount of money
charged for a product or service.

a.
Experience curve

b.
Demand curve

c.
Price

d.
Wage

3.
Little Roses’ Floral Design
sells flowers at one set price to all buyers.
What is this an example of?

a.
total costs

b.
fixed costs

c.
variable costs

d.
dynamic pricing

4.
Big Mike’s Health Food Store
sells nutritional energy-producing foods.
The price of the products sold varies according to individual customer
accounts and situations. For example,
long-time customers receive discounts.
This strategy is an example of _____.

a.
price elasticity

b.
cost-plus pricing

c.
dynamic pricing

d.
value pricing

5.
Price is the only element in
the marketing mix that produces _____.

a.
revenue

b.
variable costs

c.
expenses

d.
fixed costs

6.
Companies set _____ as their
major objective if they are troubled by too much capacity, heavy competition,
or changing consumer wants.

a.
current profit maximization

b.
survival

c.
market share leadership

d.
product quality leadership

7.
Lawnmowers of Chicago is a landscaping
company established throughout the American Midwest. Upon entering a new community, lower prices
are asked for their services. After
gaining a respectable reputation in a new area, prices are gradually
increased. Starting a business in this
manner is an example of which marketing objective?

a.
current profit maximization

b.
market share leadership

c.
product quality leadership

d.
survival

8.
Firms set prices as low as
possible in order to become the _____.

a.
product quality leader

b.
market share leader

c.
customer quality leader

d.
profit maximization leader

9.
Caterpillar charges 20 percent
to 30 percent more than competitors for its heavy construction equipment based
on superior product and service quality.
This is an example of _____.

a.
survival

b.
current profit maximization

c.
market share leadership

d.
product quality leadership

10.
Companies may set prices low
for which of the following reasons?

a.
to prevent competition from
entering the market

b.
to stabilize the market

c.
to create excitement for a
product

d.
all of the above

11.
Which of the following pricing
objectives is most used by a university?

a.
partial cost recovery

b.
full cost recovery

c.
social price

d.
cost-plus pricing

12.
Swatch surveyed the market and
identified an unserved segment of watch buyers.
Using these results, they created a watch at a price consumers were
willing to pay. The unorthodox order of
this marketing mix decision is an example of _____.

a.
competition-based pricing

b.
cost-plus pricing

c.
target costing

d.
value-based pricing

13.
Johnson Controls produces
climate-control systems for office buildings.
Research showed that customers were more concerned about the total cost
of installing and maintaining a system than its initial price. This knowledge is an example of _____, which
the company may use to become more competitive.

a.
target costing

b.
value pricing

c.
cost-plus pricing

d.
a nonprice position

14.
Costs that do not vary
with production or sales level are referred to as _____.

a.
fixed costs

b.
variable costs

c.
target costs

d.
total costs

15.
Costs that vary directly with
the level of production are referred to as _____.

a.
fixed costs

b.
variable costs

c.
target costs

d.
total costs

16.
_____ are the sum of the _____
and _____ for any given level of production.

a.
Fixed costs; variable; total
costs

b.
Fixed costs; total; variable
costs

c.
Variable costs; fixed; total costs

d.
Total costs; fixed; variable
costs

17.
SRAC is an acronym for _____.

a.
strategic reasoning and costs

b.
short-run accounting costs

c.
short-run average cost curve

d.
strategic rights and company

18.
Fixed costs _____ as number of
units produced increases.

a.
decrease

b.
increase

c.
divide in half

d.
remain the same

19.
The long-run average cost curve
(LRAC) helps the producer understand which of the following?

a.
It shows how large a business
should be, to be most efficient.

b.
It deals mainly with
competitor’s prices.

c.
It deals mainly with external
factors.

d.
none of the above

20.
As production experience
increases, the average cost per unit decreases.
This drop is called the _____.

a.
demand curve

b.
experience curve

c.
short-run average cost curve

d.
long-run average cost curve

21.
When a downward-sloping
experience curve exists, a company should usually ______ the selling price of
that product, in order to bring in higher revenues.

a.
increase

b.
greatly increase

c.
decrease

d.
not alter

22.
Price setting is usually
determined by ______ in small companies.

a.
top management

b.
marketing departments

c.
sales departments

d.
divisional managers

23.
Price setting is usually
determined by _____ in large companies.

a.
top management

b.
divisional managers

c.
product line managers

d.
both b and c

24.
In industrial markets, _____
has the final say in setting the pricing objectives and policies of that
company.

a.
the sales manager

b.
top management

c.
the production manager

d.
the finance manager

25.
Which of the following falls
under the category of an industrial company?

a.
bubble gum producers

b.
furniture producers

c.
steel producers

d.
clothing producers

26.
Which of the following is an
external factor that affects pricing decisions?

a.
the salaries of production
management

b.
competition

c.
the salaries of finance
management

d.
funds expensed to clean
production equipment

27.
Under _____, the market
consists of many buyers and sellers trading in a uniform commodity such as
wheat, copper, or financial securities.

a.
pure competition

b.
monopolistic competition

c.
oligopolistic competition

d.
pure monopoly

28.
In Lima, Peru, twenty stores
specializing in selling the same quality and brand of wheat products are
located on one street. An individual
seller cannot charge more than the going price without the risk of
losing business to the other stores that are still selling the product at its
uniform price. This is an example of
what type of market?

a.
pure competition

b.
monopolistic competition

c.
oligopolistic competition

d.
pure monopoly

29.
Under _____, the market
consists of many buyers and sellers who trade over a range of prices rather
than a single market price.

a.
pure competition

b.
monopolistic competition

c.
oligopolistic competition

d.
pure monopoly

30.
Under _____, the market
consists of a few sellers who are highly sensitive to each other’s pricing and
marketing strategies.

a.
pure competition

b.
monopolistic competition

c.
oligopolistic competition

d.
pure monopoly

31.
In _____, competition is not
a price setting consideration.

a.
Bob’s Shiny Copper Products

b.
Kinko’s

c.
Randy Rotsky’s Car Sales

d.
The U.S. Postal Service

32.
Nonregulated monopolies are
free to price at what the market will bear.
However, they do not always charge the full price for a number of
reasons. What is not one of those
reasons?

a.
They desire to attract
competition.

b.
They desire to penetrate the
market faster with a low price.

c.
They have a fear of government
regulation.

d.
They want to encourage
government regulations.

33.
If customers perceive that the
price is greater than the product’s value, they will buy it, but the seller
loses _____.

a.
target cost

b.
price elasticity

c.
profit opportunities

d.
break-even pricing

34.
The relationship between the
price charged and the resulting demand level can be shown as the _____.

a.
demand curve

b.
variable cost

c.
target cost

d.
break-even pricing

35.
When Gibson Guitar Corporation
lowered its prices to compete more effectively with Japanese rivals, why did
they not sell more guitars?

a.
The Gibson guitars were not as
well made as the Japanese guitars.

b.
The market was already flooded
with guitars.

c.
The sound of the Gibson guitar
was not as good as the Japanese guitars.

d.
Customers were unable to
distinguish the superiority of the Gibson guitar when it was at a lower price.

36.
_____ is how responsive demand will be to a change
in price.

a.
Price elasticity

b.
Break-even pricing

c.
Demand curve

d.
Target cost

37.
If demand hardly changes with a
small change in price, we say the demand is _____.

a.
variable

b.
inelastic

c.
value-based

d.
at break-even pricing

38.
If demand changes greatly with
a small change in price, we say the demand is _____.

a.
inelastic

b.
variable

c.
elastic

d.
value-based

39.
When we are talking about price
elasticity of demand, the less elastic the demand, the more it pays for the
seller to _____.

a.
drop the price

b.
raise the price

c.
leave the price where it is

d.
discontinue the item

40.
Buyers are less price sensitive
for all of the following reasons except
_____.

a.
when the product they are
buying is unique

b.
when the product they are
buying is in high demand

c.
when substitute products are
hard to find

d.
when the total expenditure for
a product is high relative to their income

41.
By pledging to be a leader in
providing clean, renewable energy sources and developing products and services
that help consumers protect the environment, Green Mountain Power competes
successfully against “cheaper” brands that focus on more price-sensitive
consumers. They have the firm belief
that even kilowatt hours can be _____.

a.
cost-plus priced

b.
a demand curve

c.
differentiated

d.
value-based priced

42.
If Cannon Camera Company
follows a high-price, high-margin strategy, what will likely happen to other
companies such as Nikon, Minolta, and Pentax?

a.
They will go out of business.

b.
They will want to compete against
Cannon.

c.
They will advertise less.

d.
none of the above

43.
If Cannon Camera Company
follows a low-price, low-margin strategy, what will likely happen to other
companies such as Nikon, Minolta, and Pentax?

a.
They will not be able to
compete or it may drive them out of the market.

b.
They will want to compete
against Cannon.

c.
They will advertise less.

d.
none of the above

44.
When setting prices, the
company also must consider other factors in its external environment. _____ can have a strong impact on the firms
pricing strategies. This includes
factors such as boom or recession, inflation, and interest rates affecting
pricing decisions.

a.
Demand curve

b.
Economic conditions

c.
Target costing

d.
Value-based pricing

45.
When setting prices, the
company also must consider other factors in its external environment. How will _____ react to various prices? The company should set prices that will allow
these people to receive a fair profit.

a.
resellers

b.
producers

c.
consumers

d.
the elderly

46.
When companies set prices, the
government and social concerns are two _____ affecting pricing decisions.

a.
external factors

b.
internal factors

c.
economic conditions

d.
demand curves

47.
Product costs set a(n) _____ to
the price.

a.
demand curve

b.
experience curve

c.
floor

d.
learning curve

48.
Consumer perceptions of the
products value set the _____.

a.
demand curve

b.
floor

c.
ceiling

d.
variable cost

49.
Companies set prices by
selecting a general pricing approach that includes one or more of three sets of
factors. One of these is the cost-based
approach which means _____.

a.
value-based pricing

b.
going-rate and sealed-bid
pricing

c.
cost-plus pricing, break-even
analysis, and target profit pricing

d.
none of the above

50.
Companies set prices by
selecting a general pricing approach that includes one or more of three sets of
factors. One of these is the buyer-based
approach which means _____.

a.
value-based pricing

b.
going-rate and sealed-bid
pricing

c.
cost-plus pricing, break-even
analysis, and target profit pricing

d.
none of the above

51.
Companies set prices by
selecting a general pricing approach that includes one or more of three sets of
factors. One of these is the
competition-based approach which means _____.

a.
value-based pricing

b.
going-rate and sealed-bid
pricing

c.
cost-plus pricing, break-even
analysis, and target profit pricing

d.
none of the above

52.
Lawyers, accountants, and other
professionals typically price by adding a standard markup for profit. This is known as _____.

a.
variable costs

b.
cost-plus pricing

c.
value-based price

d.
break-even price

53.
_____ pricing works only if
that price actually brings in the expected level of sales.

a.
Elasticity

b.
Markup

c.
Variable

d.
Inelasticity

54.
What is one reason that markup
pricing is not practical?

a.
Sellers earn a fair return on
their investment.

b.
By tying the price to cost,
sellers simplify pricing.

c.
When all firms in the industry
use this pricing method, prices tend to be similar.

d.
This method ignores
demand.

55.
When all firms in the industry
use this pricing method, prices tend to be similar.

a.
markup pricing

b.
variable pricing

c.
inelasticity pricing

d.
elasticity pricing

56.
When all firms in the industry
use this pricing method, price competition is minimized.

a.
variable pricing

b.
markup pricing

c.
elasticity pricing

d.
inelasticity pricing

57.
Many people feel that _____
pricing is fairer to both buyers and sellers.
Sellers earn a fair return on their investment but do not take advantage
of buyers when buyers’ demand becomes great.

a.
variable

b.
markup

c.
elasticity

d.
inelasticity

58.
Break-even pricing, or a
variation called _____ is when the firm tries to determine the price at which
it will break even to make the profit it is seeking.

a.
competition-based pricing

b.
target profit pricing

c.
fixed cost

d.
value-based pricing

59.
Target pricing uses the concept
of a _____, which shows the total cost and total revenue expected at different
sales volume levels.

a.
value-based chart

b.
break-even chart

c.
competition-based chart

d.
demand curve

60.
As a manufacturer increases
price, _____ volume drops.

a.
target

b.
break-even

c.
cost-plus pricing

d.
total cost

61.
As a manufacturer increases
price, _____ for their product falls off.

a.
cost-plus pricing

b.
value-based pricing

c.
demand

d.
the experience curve

62.
_____ uses buyers’ perceptions
of what a product is worth, not the seller’s cost, as the key to pricing.

a.
Value-based pricing

b.
Target costing

c.
Variable costs

d.
Price elasticity

63.
In _____, price is considered
along with the other marketing mix variables before the marketing program is
set.

a.
target pricing

b.
value-based pricing

c.
variable costs

d.
price elasticity

64.
_____ pricing is product
driven. The company designs what it
considers to be a good product, totals the expenses of making the product, and
sets a price that covers costs plus a target profit.

a.
Value-based

b.
Fixed cost

c.
Cost-based

d.
Variable

65.
Value-based pricing is the
reverse process of what?

a.
variable cost pricing

b.
cost-plus pricing

c.
cost-based pricing

d.
none of the above

66.
In _____ price is set to match
consumers’ perceived value.

a.
variable cost pricing

b.
cost-plus pricing

c.
cost-based pricing

d.
value-based pricing

67.
Measuring _____ can be
difficult. A company might conduct
surveys to test this of the different products they offer.

a.
price elasticity

b.
demand curve

c.
perceived value

d.
break-even pricing

68.
Under-priced products sell very
well, but they produce less revenue than they would have if price were raised
to the _____ level.

a.
perceived value

b.
value-based

c.
variable

d.
demand curve

69.
During the past decade,
marketers have noted a fundamental shift in consumer attitudes toward price and
quality. How is this shift defined?

a.
Give customers more for less.

b.
Give customers more symbols.

c.
Customers demand higher quality
products.

d.
Customers want more selection.

70.
When Taco Bell and McDonald’s
offer meals at a lower price than what it would cost to purchase each
individual item from the meal it is called _____.

a.
break-even pricing

b.
target profit pricing

c.
value pricing

d.
cost-plus pricing

71.
_____ involves redesigning
existing brands in order to offer more quality for a given price or the same
quality for less.

a.
Break-even pricing

b.
Target pricing

c.
Value pricing

d.
Cost-plus pricing

72.
_____ is a company’s power to
maintain or even raise prices without losing market share.

a.
Variable cost

b.
Pricing power

c.
Target cost

d.
Fixed cost

73.
To maintain a company’s _____,
a firm must retain or build the value of its marketing offer.

a.
variable cost

b.
pricing power

c.
target cost

d.
fixed cost

74.
When there is intense price
competition, many companies adopt _____ rather than cutting prices to match
competitors.

a.
pricing power

b.
value-added strategies

c.
fixed costs

d.
price elasticity

75.
What is the important type of
value pricing that Wal-Mart uses?

a.
competition-based pricing

b.
EDLP

c.
cost-plus pricing

d.
break-even pricing

76.
_____ involves charging a
constant, everyday low price with few or no temporary price discounts.

a.
High-low pricing

b.
Target pricing

c.
Cost-plus pricing

d.
EDLP

77.
What is the type of pricing
that Kmart uses?

a.
EDLP

b.
variable pricing

c.
high-low pricing

d.
target pricing

78.
Retailers adopt EDLP for many
reasons. The most important of which is that _____.

a.
constant sales and promotions
are costly and have eroded consumer confidence in the credibility of everyday
shelf prices

b.
running frequent promotions to
lower prices temporarily on selected items brings more customers into their
stores

c.
when their level of production
is up, they can charge more for their products

d.
none of the above

79.
Some reasons that consumers
like _____ so well are because consumers have less time and patience for such
time-honored traditions as watching for supermarket specials and clipping
coupons.

a.
variable pricing

b.
high-low pricing

c.
EDLP

d.
break-even

80.
Why did Kmart’s strategy to
follow Wal-Mart’s EDLP fail?

a.
Kmart had too much inventory.

b.
Because Kmart had no friendly
greeters at their doors.

c.
Because Wal-Mart’s expenses are
only 15 percent of sales.

d.
Because K-mart customers
demanded high-low pricing.

81.
One form of _____ is going-rate
pricing, in which a firm bases its price largely on competitors’ prices, with
less attention paid to its own costs or to demand.

a.
EDLP

b.
cost-plus pricing

c.
break-even pricing

d.
competition-based pricing

82.
One form of competition-based
pricing is _____, in which a firm bases its price largely on competitors’
prices, with less attention paid to its own costs or to demand.

a.
EDLP

b.
going-rate pricing

c.
cost-plus pricing

d.
break-even pricing

83.
_____ is used when firms feel
that this price represents the collective wisdom of the industry concerning the
price that will yield a fair return.

a.
Going-rate pricing

b.
EDLP

c.
Cost-plus pricing

d.
Break-even pricing

84.
Firms feel that holding to
_____ will prevent harmful price wars.

a.
sealed-bid pricing

b.
the demand curve

c.
price elasticity

d.
the going price

85.
Using _____, a company bases
its price on how it thinks competitors will price rather than on its own costs
or on the demand.

a.
sealed-bid pricing

b.
cost-plus pricing

c.
dynamic pricing

d.
market share leadership

86.
_____ remains an important
element in the marketing mix. It is the
only element that produces revenue; all other elements represent costs.

a.
Current profit maximization

b.
Market share leadership

c.
Price

d.
Product quality leadership

87.
Common _____ objectives include
survival, current profit maximization, market share leadership, and product
quality leadership.

a.
pricing

b.
management

c.
marketing mix

d.
cost-plus pricing

88.
_____ usually sets pricing
policies and approves proposed prices.

a.
A customer

b.
Accounting management

c.
Finance management

d.
None of the above

89.
_____ that influence pricing
decisions include the nature of the market and demand; competitors’ prices and
offers; and factors such as the economy, reseller needs, and government
actions.

a.
Internal factors

b.
Elasticity

c.
External factors

d.
Target factors

90.
The more _____ the demand, the
higher the company can set its price.

a.
elastic

b.
external

c.
internal

d.
inelastic

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