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| 1 | |
Joe Johnson cast his vote for Tom Yancy, a candidate for state representative. Johnson voted for Yancy because he believed the candidate would represent his interests in the state legislature. 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 neighbor's lawn; in exchange, the neighbor roto-tilled Mathison's garden. Johnson's vote, 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 | |
Creative marketers engage in __________, the practice of simultaneously increasing product and service benefits and maintaining or decreasing price. |
| | A) | revenue sharing |
| | B) | diminishing returns |
| | C) | quantitative analysis |
| | D) | value-pricing |
| | E) | cost-plusing |
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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 | |
One of the largest and most successful companies in the pharmaceutical industry is Pfizer. Recently, Pfizer offered low-income senior citizens many of its most widely used prescriptions for $15 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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| 6 | |
Which of the following statements about profit objectives is true? |
| | A) | Managers in the United States have long been praised for their insistence on managing for long-run profits. |
| | B) | Profit objectives are frequently measured in terms of return on investment. |
| | C) | Firms that are interested in strategic planning set their objectives to maximize current profit. |
| | D) | A target return pricing objective would only be used by a company that needs to attract more customers to survive. |
| | E) | Market share and unit volume are two types of profit objectives. |
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| 7 | |
Richard Anderson, an entrepreneur residing in Arizona, noticed that many of his friends and neighbors complained of the intense heat during the summer months. In order to make the heat more bearable, Anderson developed and marketed a simple cooling system that sprayed a fine mist of water into the air. The system attached easily to patio roofs, backyard fences, and even golf carts. Since introducing the product on the market, Anderson has discovered that relatively small changes in the price of the system lead to relatively large changes in demand for his product. The demand for Anderson's product is: |
| | A) | price inelastic. |
| | B) | price elastic. |
| | C) | price sensitive. |
| | D) | price insensitive. |
| | E) | unitary elastic. |
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| 8 | |
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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| 9 | |
The sum of fixed and variable costs is called: |
| | A) | marginal cost. |
| | B) | value added. |
| | C) | average cost. |
| | D) | total administrative overhead. |
| | E) | total cost. |
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| 10 | |
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 are being produced. Materials cost per pen is $6. Labor 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 is the total cost 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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| 11 | |
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 at $39 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 lb. pails does the company need to sell to break-even? |
| | A) | 2,572 pails |
| | B) | 906 pails |
| | C) | 1,440 pails |
| | D) | 1,399 pails |
| | E) | cannot be determined from the information provided |
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| 12 | |
The first handheld calculators were priced at several hundred dollars so that its manufacturer could recoup research and development costs. Even though the first calculators only added, subtracted, multiplied, divided, and did square roots, they were so superior to other methods that customers were willing to pay the asked price. The manufacturer of the first handheld calculators used: |
| | A) | skimming pricing. |
| | B) | penetration pricing. |
| | C) | price lining. |
| | D) | odd-even pricing. |
| | E) | demand-backward pricing. |
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| 13 | |
Chico's sells women's sportswear. A simple tank top with the Chico's label costs $If you know you simply want a tank top, you can buy a tank top for $5 at a Family Dollar Store, but it won't have the Chico's label. What kind of demand-oriented approach to pricing is being used by Chico's? |
| | A) | experience curve pricing |
| | B) | target market share pricing |
| | C) | demand-backward pricing |
| | D) | prestige pricing |
| | E) | flexible pricing |
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| 14 | |
The prices for all fruit trees sold in Stark Bros. fruit trees and landscaping catalog end in $.99 Stark Bros. uses: |
| | A) | odd-even pricing. |
| | B) | dynamic pricing. |
| | C) | price lining. |
| | D) | bundle pricing. |
| | E) | experience curve pricing. |
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| 15 | |
A 61-piece set of Noritake china costs $872.99, but if you buy the pieces individually, you can expect to pay $1,137. The lower price for the set is an example of: |
| | A) | price skimming. |
| | B) | price lining. |
| | C) | penetration pricing. |
| | D) | yield management pricing. |
| | E) | bundle pricing. |
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| 16 | |
If you are planning a trip to New York City and want a hotel room overlooking Central Park, you are likely to pay over $500 per night if you reserve the room through a hotel, but if you are flexible about the night you want, you can contact Travelocity and stay in that room for $100. To what kind of pricing policy is this practice most closely related? |
| | A) | yield management pricing |
| | B) | target pricing |
| | C) | customary pricing |
| | D) | prestige pricing |
| | E) | price lining |
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| 17 | |
Which of the following statements about cost-oriented approaches is true? |
| | A) | These methods focus on the demand side of the pricing problem and involve stimulating demand and decreasing revenue. |
| | B) | These methods focus on the supply side of the pricing problem and involve considerations of production and marketing expenses. |
| | C) | Target return on investment is an example of a cost-based method. |
| | D) | Experience curve pricing is simple to use because costs predictably decrease by 25 percent with each doubling of production. |
| | E) | Cost-oriented approaches are subcategories of competition-based methods so revenues are a critical factor. |
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| 18 | |
Consumers buy candy bars, snacks, and soda pop from vending machines. Traditionally, the price of each of these products is about $1. If a marketer charges a significantly higher price for such products dispensed by vending machines, sales are likely to decline. In order to avoid such declines in sales, marketers tend to be very consistent in the price charged for vending machine products. This is an example of marketers employing a __________ strategy. |
| | A) | below-market pricing |
| | B) | skimming pricing |
| | C) | penetration pricing |
| | D) | customary pricing |
| | E) | loss-leader pricing |
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| 19 | |
When Pechin's, a legendary supermarket 50 miles south of Pittsburgh, prices rib steaks at $2.29 a pound, which is below its cost, it is attempting not to sell steaks, but to: |
| | A) | drive its competition out of business. |
| | B) | attract customers in hopes they will buy other products as well. |
| | C) | fill its parking lot so its store will look successful. |
| | D) | help the local ranching community dispose of excess beef. |
| | E) | circumvent fair trade rulings by the Federal Trade Commission (FTC). |
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| 20 | |
In the magazine industry, subscription prices can vary depending on the method of solicitation. The magazine industry uses: |
| | A) | customary pricing. |
| | B) | flexible-price policy. |
| | C) | basing-point pricing. |
| | D) | price lining. |
| | E) | loss-leader pricing. |
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