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1 | |
Patty O'Rourke hired an attorney to represent her in a court case involving an auto accident. The attorney charged O'Rourke a fee for his services. Terry Thomas needed a haircut-the local stylist charged him $12 for her services. Aaron Mathison mowed his neighbour's lawn; in exchange, the neighbour roto-tilled Mathison's garden. The attorney fees paid by O'Rourke, the $12 charged by the hair stylist, and exchange of lawn mowing for garden tilling are examples of: |
| | A) | price. |
| | B) | barter. |
| | C) | fee setting. |
| | D) | unfair market exchanges. |
| | E) | product fares. |
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2 | |
On an episode of the television show Friends, Phoebe traded some maternity clothes for tickets to a Sting concert. This trade was: |
| | A) | an example of barter because it involved the exchange of goods. |
| | B) | an example of a countertrade because it took place in the business market. |
| | C) | an example of a value exchange. |
| | D) | an incentive because it created value where there was none. |
| | E) | an example of nonprice competition. |
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3 | |
The Society of American Florists (SAF) is an association that provides marketing, management, accounting, and legal services for the entire floral industry. Members in the for-profit association pay annual dues. Within the last two years, SAF created and is maintaining an e-marketplace where members with merchandise to sell use the Internet to find members who need their merchandise. In addition, SAF has created a number of instructional programs that are free to members. SAF has provided these additional services without raising its annual dues. SAF's recent strategy is an example of: |
| | A) | socially responsible pricing. |
| | B) | a value exchange. |
| | C) | value-pricing. |
| | D) | website marketing. |
| | E) | a price/quality exchange. |
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4 | |
If a company's total annual revenues are $270,000, and its total cost for the same year was $180,000, then its profit would be $90,000. $270,000 minus $180,000 equals $90,000 is its: |
| | A) | break-even in dollars. |
| | B) | profit equation. |
| | C) | price elasticity. |
| | D) | break-even in quantity. |
| | E) | marginal analysis. |
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5 | |
An analysis of a prospective product shows it is expected to grow by at least 10 percent each year over the next 5 years, and then enter the maturity phase of its product life cycle. This type of analysis would provide useful information in which stage of the price-setting process? |
| | A) | identifying pricing constraints and objectives |
| | B) | determining cost, volume, and profit relationships |
| | C) | estimating demand and revenue |
| | D) | selecting an appropriate (approximate) price lining strategy |
| | E) | making special adjustments to list or quoted price |
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6 | |
Hallmark was the official supplier of flowers at the 2002 Winter Olympics. Each Olympic winner wais being presented with a special bouquet of roses designed to resemble the Olympic torch. Consumers can buy a smaller version of this same bouquet at the Hallmark website for $74.95. The arrangement contains two dozen yellow roses. Which of the following may have been a pricing constraint when setting this price? |
| | A) | Demand is roses is high in February when the Olympics is taking place. |
| | B) | As a product category, rose bouquets are in the introduction stage. |
| | C) | Hallmark sells a lot of roses. |
| | D) | All of Hallmark's competitors can sell rose bouquets. |
| | E) | None of the above is an example of a pricing constraint that may have influenced the price Hallmark charged for its Olympic bouquets. |
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7 | |
Turkmenistan is a Central Asian country that used to be part of the Soviet Republic. The only Internet service provider (ISP) in the country is Turkmen Telecom, a government-operated facility. Turkmen Telecom is an example of _____ because there is no competition to determine what pricing strategy it uses. |
| | A) | pure competition |
| | B) | an oligopololy |
| | C) | oligopolistic competiton |
| | D) | monopolistic competition |
| | E) | a pure monopoly |
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8 | |
Which of the following statements about pure competition is true? |
| | A) | In a pure competition, the market sets the price. |
| | B) | Product differentiation is a commonly used strategy in pure competition. |
| | C) | In pure competition, some advertising is used to increase demand for a product class. |
| | D) | Price leadership is a common strategy in pure competition. |
| | E) | In pure competition, there are only a few sellers who are sensitive to each other's prices. |
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9 | |
If competitive market circumstances are such that there are a lot of sellers who use some price competition, some product differentiation, and the purpose of advertising is to differentiate the firm's products from competitors, then _____ must exist in the industry. |
| | A) | a pure monopoly |
| | B) | an oligopoly |
| | C) | monopolistic competition |
| | D) | pure competition |
| | E) | oligopolistic competition |
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10 | |
One of the largest and most successful companies in the pharmaceutical industry is Pfizer. In 2002, Pfizer offered low-income senior citizens many of its most widely used prescriptions for $15 each a month. This low $15 price was selected in order for Pfizer to achieve what kind of pricing objective? |
| | A) | market share |
| | B) | survival |
| | C) | social responsibility |
| | D) | maximizing current profit |
| | E) | none of the above |
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11 | |
A _____ shows the maximum number of products consumers will buy at a given price. |
| | A) | marginal analysis |
| | B) | perceptual map |
| | C) | demand curve |
| | D) | break-even analysis |
| | E) | supply curve |
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12 | |
Ampro-Mag is a small company that distributes materials for safely controlling hazardous spills of all kinds. It sells these items as a neutralizing kit priced at $120 each. (There is no quantity discount.) The costs of the materials that go into each kit are $45. It costs $5 in labour to assemble a kit. The company has monthly expenses of $1,000 for rent and insurance, $200 for heat and electricity, $500 for advertising in trade journals, and $3,500 for the monthly salary of its owner. Ampro-Mag's marginal revenue is: |
| | A) | $50. |
| | B) | $120. |
| | C) | $170. |
| | D) | $3,500. |
| | E) | $5,200. |
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13 | |
Which of the following would be the BEST example of a fixed cost for a university bookstore? |
| | A) | its inventory of principles of marketing texts |
| | B) | overtime for its employees at the beginning of each semester |
| | C) | shoplifting costs |
| | D) | the salary of the bookstore manager |
| | E) | poster board and markers used for making signs |
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14 | |
The Precision Writing Instruments Company makes two pen designs-the Cordova design and the Savannah design. These data apply, regardless of which of two pen designs is being implemented. Materials cost per pen is $6. Labour cost per pen is $5. Production overhead is $1,000,000. Advertising and promotion is $1,000,000. Marketing research has estimated the following demand functions for the next year of sales for the two pen designs where Q represents demand in thousands and P represents price. For the Cordova design, Q = 150 - 2.5P. For the Savannah design, Q = 175 - 2.1P. What are the total costs for sales of 500,000 units of the Cordova design? |
| | A) | $1,000,000 |
| | B) | $2,000,000 |
| | C) | $3,650,00 |
| | D) | $5,500,000 |
| | E) | $7,500,000 |
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15 | |
Bag Balm is a salve used originally on cattle. Many people have found it to be extremely helpful on their pets' cuts, skin irritations, and paw abrasions. A 4.5-pound pail of Bag Balm is priced $39.75 when purchased from the manufacturer. The company's fixed costs are $36,000, and its variable costs for the balm are $14 per pail. How many 4.5 pails does the company need to sell to break-even? |
| | A) | 2,572 pails |
| | B) | 906 pails |
| | C) | 670 pails |
| | D) | 1,399 pails |
| | E) | cannot be determined from the information provided |
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