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| 1 | |
Which of the following is not a major factor influencing a company’s pricing decisions? |
| | A) | Market positioning. |
| | B) | Internal control systems. |
| | C) | Customer value. |
| | D) | Competitor behaviour. |
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| 2 | |
A French cosmetics company owned by an haute couture fashion design atelier has a reputation for very high quality and prestigious products and sets a high price for its products. The major factor influencing the company’s prices is: |
| | A) | market positioning |
| | B) | product cost |
| | C) | customer value |
| | D) | competitor behaviour |
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| 3 | |
When a company is striving to deliver a product or service of a superior value to a customer, the company is attempting to understand: |
| | A) | gross profit |
| | B) | net profit |
| | C) | customer value |
| | D) | customer profit |
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| 4 | |
When a company is deciding its pricing policy, usually the lower limit for setting a price for a product or service is: |
| | A) | dependent on which market the company has positioned itself in |
| | B) | the cost of producing the product or the service |
| | C) | the value the customer gains from owning and using the product |
| | D) | set by statutory marketing authorities |
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| 5 | |
The total revenue curve graphs: |
| | A) | the relationship between total sales revenue and the quantity sold |
| | B) | the relationship between the sales price and the quantity of units demanded |
| | C) | the relationship between total cost and the quantity produced and sold |
| | D) | the change in total cost that accompanies a change in the quantity of the product produced and sold |
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| 6 | |
The profit-maximising sales quantity, q*, for a product is determined by the intersection of: |
| | A) | the marginal cost curve and the average revenue curve |
| | B) | the total cost curve and the average revenue curve |
| | C) | the total revenue curve and the marginal cost curve |
| | D) | the marginal cost curve and the marginal revenue curve |
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| 7 | |
The profit-maximising optimal price, p*, is determined by: |
| | A) | finding the intersection of the marginal cost curve and the marginal revenue curve to determine the profit-maximising sales quantity, q*, and using the total revenue curve to determine p* at q* |
| | B) | finding the intersection of the marginal cost curve and the marginal revenue curve to determine the profit-maximising sales quantity, q*, and using the total cost curve to determine p* at q* |
| | C) | finding the intersection of the marginal cost curve and the marginal revenue curve to determine the profit-maximising sales quantity, q*, and using the demand (or average revenue) curve to determine p* at q* |
| | D) | finding the intersection of the marginal cost curve and the marginal revenue curve to determine the profit-maximising sales quantity, q*, and using the average cost curve to determine p* at q* |
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| 8 | |
The general form of cost-plus pricing is: |
| | A) | price = cost + markup percentage |
| | B) | price = markup percentage x cost |
| | C) | price = cost + (markup percentage x cost) |
| | D) | price = cost ÷ markup percentage |
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| 9 | |
When determining the most suitable mark-up to be used in a cost-plus pricing formula, the more formal method is based on target: |
| | A) | gross margin |
| | B) | contribution margin |
| | C) | return on investment |
| | D) | capital turnover |
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| 10 | |
Which of the following formulas represents the markup percentage based on variable cost when using return on investment pricing? |
| | A) | (Target profit + total selling and administrative costs) ÷ (annual volume x absorption cost per unit) |
| | B) | Target profit ÷ (annual volume x absorption cost per unit) |
| | C) | (Annual volume x absorption cost per unit) ÷ (target profit + total selling and administrative costs) |
| | D) | (Target profit + total annual fixed costs) ÷ (annual volume x total variable cost per unit) |
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