Multiple Choice Quiz


1	Two basic ways to set list prices are the cost-oriented and _____________ -oriented approaches.
		A)	Expense
		B)	Demand
		C)	Profit
		D)	Volume


2	____________ means the percentage of selling price that is added to the cost to get the selling price.
		A)	Markup
		B)	Net
		C)	Excess
		D)	Overage


3	The ___________ is the amount that is left, after subtracting the cost of sales from net sales, to cover the expenses of selling products and operating the business.
		A)	Markup
		B)	Net margin
		C)	Gross margin
		D)	Profit


4	The ________________ is the sequence of markups firms use at different levels in a channel that determines the price structure in the whole channel.
		A)	Markup chain
		B)	Profit channel
		C)	Gross margin chain
		D)	Net profit chain


5	The number of times the average inventory is sold in a year is the _____________.
		A)	Inventory exchange rate
		B)	Stockturn rate
		C)	Turnover rate
		D)	Restock rate


6	_______________ means adding a reasonable markup to the average cost of a product.
		A)	Average-cost pricing
		B)	Net profit pricing
		C)	Gross margin pricing
		D)	None of the above


7	The sum of those expenses that change with output are called ____________.
		A)	Total fixed costs
		B)	Total variable costs
		C)	Total flexible costs
		D)	Total cost


8	The average cost per unit is obtained by dividing total fixed costs by the related quantity?
		A)	True
		B)	False


9	___________ means offering a specific price for each possible job rather than setting a price that applies for all customers.
		A)	Bid pricing
		B)	Product-bundle pricing
		C)	Demand pricing
		D)	Projected pricing


10	A break-even analysis evaluates whether the firm will be able to cover all of its costs with a particular price.
		A)	True
		B)	False


11	The formula to determine a break-even point (BEP) is:
		A)	BEP = Total fixed costs/Fixed cost contribution per unit
		B)	BEP = Total cost/Fixed cost contribution per unit
		C)	BEP = Total fixed costs/Variable cost contribution per unit
		D)	None of the above


12	A ______________ analysis focuses on the changes in total revenue and total cost from selling one more unit to find the most profitable price and quantity.
		A)	Net profit
		B)	Excess profit
		C)	Marginal
		D)	Gross margin


13	Estimating demand in a marginal analysis is:
		A)	Unimportant
		B)	Optional
		C)	Of some importance
		D)	Essential


14	"Value in use" pricing means setting prices that will capture some of what customers will save by substituting the firm's product for the one currently being used.
		A)	True
		B)	False


15	Setting prices that end in certain numbers is known as ______________.
		A)	Psychological pricing
		B)	Price lining
		C)	Odd-even pricing
		D)	Product-bundle pricing


16	Setting prices that have special appeal to target customers is ______________.
		A)	Value in use pricing
		B)	Reference pricing
		C)	Bait pricing
		D)	Psychological pricing


17	The _____________ is the price that consumers expect to pay for many of the products they purchase.
		A)	Reference price
		B)	Psychological price
		C)	Value in use price
		D)	Prestige price


18	The practice of setting some very low prices to attract customers but trying to sell more expensive models or brands once the customer is in the store is ____________.
		A)	Psychological pricing
		B)	Prestige pricing
		C)	Bait pricing
		D)	Demand-backward pricing

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