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| 1 | |
College tuitions, initiation fees, bus fares, and club dues are all: |
| | A) | premiums. |
| | B) | bartering tools. |
| | C) | mediums of exchange. |
| | D) | synonyms for price. |
| | E) | examples of liquidity. |
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| 2 | |
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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| 3 | |
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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| 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 | |
Hallmark was the official supplier of flowers at the Winter Olympics. Each Olympic winner was 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 for 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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| 6 | |
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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| 7 | |
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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| 8 | |
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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| 9 | |
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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| 10 | |
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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| 11 | |
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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| 12 | |
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. 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 tens of 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) | $1,650,000 |
| | B) | $1,925,000 |
| | C) | $3,650,00 |
| | D) | $3,925,000 |
| | E) | $7,500,000 |
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| 13 | |
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 $39.00 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 pound pails does the company need to sell to break-even? |
| | A) | 2,572 pails |
| | B) | 906 pails |
| | C) | 670 pails |
| | D) | 1,440 pails |
| | E) | cannot be determined from the information provided |
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| 14 | |
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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| 15 | |
While many people believe shoes are simply something that you wear on your feet to protect them from the environment, many other people believe the kind of shoes a person wears makes a statement about them and their lifestyle. These people are willing to pay $400 or more for a pair of shoes because to them the price indicates quality. The marketer of these shoes would use: |
| | A) | yield management pricing. |
| | B) | target pricing. |
| | C) | customary pricing. |
| | D) | prestige pricing. |
| | E) | price lining. |
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| 16 | |
The Wm. Wrigley Jr. Co. recently introduced a new flavor of Orbit brand sugar free chewing gum—mint mojito. The introductory price was low so that it would create loyal customers for the flavor quickly. In this example Wrigley is using |
| | A) | skimming pricing. |
| | B) | penetration pricing. |
| | C) | price lining. |
| | D) | odd-even pricing. |
| | E) | demand-backward pricing. |
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| 17 | |
Chico's sells women's sportswear. A simple tank top with the Chico's label costs $48. If you are 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 this manufacturer? |
| | A) | experience curve pricing |
| | B) | target market share pricing |
| | C) | demand-backward pricing |
| | D) | prestige pricing |
| | E) | flexible pricing |
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| 18 | |
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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| 19 | |
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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| 20 | |
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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