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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 | |
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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| 5 | |
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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| 6 | |
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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| 7 | |
An analysis of a prospective product shows it is expected to grow at least by 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) | select an appropriate (approximate) price lining strategy |
| | E) | make special adjustments to list or quoted price |
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| 8 | |
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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| 9 | |
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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| 10 | |
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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| 11 | |
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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| 12 | |
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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| 13 | |
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 or return on assets. |
| | 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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| 14 | |
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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| 15 | |
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 labor 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 for the month is: |
| | A) | $50. |
| | B) | $120. |
| | C) | $170. |
| | D) | $3,500. |
| | E) | $5,200. |
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| 16 | |
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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| 17 | |
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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| 18 | |
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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| 19 | |
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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| 20 | |
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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