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True or False
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1
A major advantage of average-cost pricing is that it assumes costs remain constant at different levels of output.
A)True
B)False
2
Average fixed cost goes down as output decreases:
A)True
B)False
3
If a company raises its price per unit, but keeps total fixed cost and variable cost per unit the same, the break-even point will be lower.
A)True
B)False
4
The change in total cost that results from producing one more unit is called marginal cost.
A)True
B)False
5
A major difference between loss-leader pricing and bait pricing is that bait pricing is criticized as unethical while leader pricing is not:
A)True
B)False
6
A regular customer walks into Tim Horton’s and expects to pay a certain amount for a cup of coffee. This is known as the customer’s reference cost.
A)True
B)False
7
Setting a price low to attract consumers to a store, but then trying to sell them another product is called loss leader pricing.
A)True
B)False
8
Setting the prices for men’s suits at an upscale store at even amounts $600, $700, and $800 is an example of prestige pricing.
A)True
B)False
9
If Radio Shack offers several models of clock radios at each $5 increment between $19.95 and $49.95, it is probably practicing price lining.
A)True
B)False
10
A restaurant owner sets low prices for food but high prices for drinks. This is an example of complementary product pricing.
A)True
B)False





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