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One problem in the interstate trucking industry is the number of trucks that return empty after making a delivery.There is a website where independent interstate truckers can look for loads to carry on their return trips,known as backhauls.Because the trucks would normally return empty,truckers who use this website to generate business they would not have otherwise receive a reduced shipping rate.This reduced rate for a backhaul is an example of


A) penetration pricing.
B) target pricing.
C) cost-plus pricing.
D) odd-even pricing.
E) yield management pricing.

F) C) and E)
G) D) and E)

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To increase value the most,marketers should


A) decrease benefits.
B) decrease benefits and increase price.
C) decrease price and increase benefits.
D) decrease price and decrease benefits.
E) hold the price steady and let the perceived value of the item increase as it matures in its life cycle.

F) A) and C)
G) B) and E)

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Reductions from list or quoted prices to buyers for performing some activity are referred to as


A) allowances.
B) subsidies.
C) remittances.
D) noncumulative deductions.
E) list price deductions.

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

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The most commonly used pricing method for business products is


A) target return on investment.
B) customary.
C) standard markup.
D) target profit.
E) cost-plus pricing.

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

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Which of the following statements regarding sales goals is most accurate?


A) For marketing managers, sales revenue or unit sales can be easily translated into meaningful targets for a product line or brand.
B) Cutting prices for a single product in a product line to raise unit sales often results in an increase in sales for related products in the line.
C) Very often, cutting prices results in a decrease in market share.
D) Setting unit volume sales as a pricing objective results in price wars with competitors, so the practice is limited to industries with few competitors.
E) An advantage of increasing unit volume sales is that it always results in an increase in profits.

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

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If a McDonald's menu board advertises Mini Meals under $3,McDonald's is most likely using which type of pricing strategy?


A) predatory pricing
B) value-pricing
C) loss-leader pricing
D) odd-even pricing
E) barter

F) C) and E)
G) B) and C)

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What is the difference between a movement along a demand curve and a shift of a demand curve?

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A movement along a demand curve assumes ...

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Price elasticity of demand (E) is expressed as ( Δ\Delta means change)


A) E = Percentage change in price (% Δ\Delta in P) / Percentage change in quantity demanded (% Δ\Delta in Q) .
B) E = Price (P) / Quantity demanded (Q) .
C) E = Percentage change in quantity demanded (% Δ\Delta in Q) / Percentage change in price (% Δ\Delta in P) .
D) E = Quantity demanded (Q) / Price (P) .
E) E = Quantity demanded (Q) / Price (P)

F) C) and D)
G) B) and C)

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Which of the following companies would be most likely to use target return-on-investment pricing?


A) a farmer
B) a supermarket chain
C) an engineering firm
D) a veterinarian
E) an automobile manufacturer

F) B) and D)
G) B) and C)

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Which of the following statements regarding pricing constraints is most accurate?


A) Generally, the greater the demand for a product, the higher the price that can be set.
B) At the corporate level, when setting pricing constraints, a firm must disregard current conditions in the marketplace because they are too temporal for long-term planning.
C) Pricing constraints must always be set, but they are rarely enforced.
D) It is possible to create pricing constraints with the greatest range possible in order to anticipate any and all changes in the marketing environment.
E) Even if a firm is trying to satisfy its obligations to its customers and society in general, it should ignore setting pricing constraints.

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

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Suppose you want to buy a Tesla Model S,the world's leading all-electric,zero-emission car that has a 265-mile range and can be recharged in three hours.The Tesla Model S Performance model has a list price of $87,500.However,you want several options (Performance Plus Package,red multi-coat armor paint,Tech Package,Sound Studio Package,home charging station,performance wheels,and others) that will cost $17,500.An extended warranty will add an additional $5,000.However,if you put $50,000 down now and finance the balance over the next year,you will receive a dealer rebate of $5,000 off the list price.The dealer will give you a $7,000 trade-in allowance for your 2008 Honda Civic DX four-door sedan.In addition,you will have to pay a state sales tax of $10,000,an auto registration fee of $1,000 to the state,and a $1,000 destination charge to ship and prep the car.But because the Tesla Model S is an alternative energy vehicle,you qualify for a $2,500 state rebate and a $7,500 federal tax credit! Finally,your total finance charge is $7,000.Applying the price equation,what is your final price for the Tesla Model S?


A) $57,000
B) $68,000
C) $87,500
D) $107,000
E) $151,000

F) None of the above
G) A) and D)

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Price elasticity of demand measures how sensitive consumer demand and the firm's revenues are to changes in the product's price.Explain the difference between a product with elastic demand and a product with inelastic demand.

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Elastic demand exists when a 1 percent d...

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Inelastic demand exists when


A) a small percentage decrease in price produces a smaller percentage increase in quantity demanded.
B) a small percentage increase in price produces a larger percentage increase in quantity demanded.
C) an increase in price is impossible due to government restrictions.
D) the quantity demanded remains the same regardless of any changes in marketing strategies.
E) a small percentage decrease in price produces a smaller percentage increase in quantity supplied.

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

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Barter is the practice of exchanging products and services for other products and services rather than for


A) value.
B) ideas.
C) promises.
D) tariffs.
E) money.

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

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Which of the following statements regarding pricing constraints is most accurate?


A) When a product is in the introductory stage of the product life cycle, the initial price must be low since consumers still don't know what the product can really do.
B) Patents and limited competition earlier in the life cycle mean that higher prices can usually be charged.
C) The greater the number of products in a company's product line, the less the product features of similar products can affect price.
D) The newest addition to a company's product line should always have the highest price in order to maintain the value of existing brands.
E) To avoid cannibalization, the newest product addition to a company's product line should never have a price lower than the other offerings in the line.

F) A) and B)
G) C) and D)

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For most products,it is difficult to identify a specific market price for a product or product class.Still,marketing managers often have a subjective feel for the competitors' price or market price.Using this benchmark,they then may deliberately choose a strategy of


A) above-, at-, or below-market pricing.
B) loss-leader pricing.
C) penetration pricing.
D) standard markup pricing.
E) experience curve pricing.

F) B) and D)
G) C) and E)

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Skimming pricing is a strategy that introduces a new or innovative product by


A) following a price elastic strategy.
B) creating multiple price points.
C) setting a high initial price.
D) setting a low initial price.
E) setting the price at the average of competitors' prices.

F) A) and C)
G) A) and B)

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Setting the highest initial price,that customers who really desire the product are willing to pay,when introducing a new or innovative product is referred to as a(n)


A) skimming strategy.
B) penetration strategy.
C) price-lining strategy.
D) experience-curve pricing strategy.
E) prestige pricing strategy.

F) B) and D)
G) A) and C)

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Target return-on-sales pricing refers to


A) adjusting the price of a product so it is "in line" with that of its largest competitor.
B) setting the price of a line of products at a number of different price points.
C) adding a fixed percentage to the cost of all items in a specific product class.
D) setting prices to achieve a profit that is a specified percentage of the sales volume.
E) setting a price based on a specific annual dollar target profit volume.

F) All of the above
G) A) and D)

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Price refers to


A) the value assigned to the exchange of products and services for other products and services.
B) the value judgment made by both the buyer and seller regarding an item's worth.
C) the money or other considerations (including other products and services) exchanged for the ownership or use of a product or service.
D) the value assessed for the benefits of using a product or service.
E) the highest monetary value a customer is willing to pay for a product or service.

F) All of the above
G) A) and B)

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