Question 1

Under ________,the market consists of one seller.
A) a pure monopoly
B) monopolistic competition
C) oligopolistic competition
D) pure competition
E) capitalism

Accepted Answer

A pure monopoly is the only market structure where there is only one seller of a particular good or service. In this structure, the seller has complete control over the pricing and distribution of the product, and there are no close substitutes available. This lack of competition allows the seller to charge a higher price, resulting in a higher profit margin. Therefore, a pure monopoly is the only option where the market consists of one seller.

Question 2

Trader Joe's offers an assortment of exclusive gourmet products at impossibly low prices.These prices are not limited-time offers or special discounts.Instead,they reflect Trader Joe's ________ strategy.
A) everyday low pricing
B) cost-plus pricing
C) dynamic pricing
D) value-based pricing
E) cost-based pricing

Accepted Answer

The statement mentions that the low prices offered by Trader Joe's are not limited-time offers or special discounts but are always available. This suggests that they follow an everyday low pricing strategy, where prices are consistently kept low rather than fluctuating based on external factors.

Question 3

Superior Tires has decided to decrease its prices.The company can expect that ________ for its product will increase.
A) cost-plus pricing
B) value-based pricing
C) demand
D) the experience curve
E) competition

Accepted Answer

If Superior Tires decreases its prices, it can expect an increase in demand for its product. This is because lower prices typically lead to an increase in demand as consumers are more willing to purchase the product at a lower price point.

Question 4

Buyers are less price sensitive in all of the following situations EXCEPT ________.
A) when the product they are buying is unique
B) when the product they are buying is high in quality
C) when substitute products are hard to find
D) when the total expenditure for a product is high relative to their income
E) when the product is exclusive

Accepted Answer

When the total expenditure for a product is high relative to their income, buyers become more price sensitive because they are more careful about spending their money. In all other situations, buyers are less price sensitive because they perceive the product to be unique, high-quality, difficult to substitute, or exclusive.

Question 5

The relationship between the price charged and the resulting demand level can be shown as the ________.
A) demand curve
B) variable cost
C) target cost
D) break-even pricing
E) experience curve

Accepted Answer

The relationship between price and resulting demand is typically represented by a demand curve, which shows how much of a product or service consumers are willing to buy at different price points.

Question 6

If demand changes greatly with a small change in price,we say the demand is ________.
A) variable
B) inelastic
C) value-based
D) elastic
E) fixed

Accepted Answer

When demand changes greatly with a small change in price, we say the demand is elastic. This means that consumers are sensitive to price changes and will adjust their consumption accordingly. Inelastic demand, on the other hand, means that consumers do not significantly change their consumption habits when prices change.

Question 7

Assume a manufacturer with fixed costs of $100,000,a variable cost of $10,and expected sales of 50,000 units wants to earn a 20 percent markup on sales.What is the manufacturer's markup price?
A) $14
B) $15
C) $18
D) $18.50
E) none of the above

Accepted Answer

The answer of Assume a manufacturer with fixed costs of...

Question 8

Xbox 360 decides to add a free subscription to XBOX magazine with every game bought in an effort to differentiate its offering from PS3 games.This is an example of ________.
A) good-value pricing
B) add-on pricing
C) product-support pricing
D) value-added pricing
E) cost-based pricing

Accepted Answer

This is an example of value-added pricing, as the free subscription to XBOX magazine adds value to the product offering and differentiates it from the competition.

Question 9

Firms are less affected by competitors' pricing strategies under ________ than under ________.
A) monopolistic competition; oligopolistic competition
B) pure competition; monopolistic competition
C) oligopolistic competition; pure competition
D) oligopolistic competition; monopolistic competition
E) pure competition; a pure monopoly

Accepted Answer

The answer of Firms are less affected by competitors' pricing...

Question 10

In the aftermath of a recession,consumers may become ________.
A) more price-sensitive
B) less value-conscious
C) more interested in prestige pricing
D) less interested in price cutting
E) more loyal to prestigious products

Accepted Answer

In the aftermath of a recession, consumers tend to be more price-sensitive and try to save money by looking for value deals and discounts.

Question 11

The long-run average cost curve (LRAC)helps the producer understand which of the following?
A) What the level of production should be in order to be most efficient
B) How to deal with competitors' prices
C) How to deal with external factors
D) How to price under conditions of inelastic demand
E) How to price under conditions of elastic demand

Accepted Answer

The long-run average cost curve (LRAC) helps the producer understand the level of production that will result in the most efficient use of resources in the long run. This is because the LRAC shows the average cost per unit of output at various levels of production, taking into account factors such as economies of scale and the optimal combination of inputs.

Question 12

________ describes how responsive demand will be to a change in price.
A) Price elasticity
B) Break-even pricing
C) The demand curve
D) Target costing
E) Supply

Accepted Answer

Price elasticity refers to the degree to which demand for a product or service is affected by a change in its price. High price elasticity means that a small change in price results in a large change in demand, while low price elasticity means that a change in price has little effect on demand.

Question 13

Amos sells organically grown produce.Often he will trade some of his produce for dairy products produced by other farmers.The sum of the values exchanged for the produce is the ________.
A) price
B) cost-plus price
C) dynamic price
D) common value price
E) penetration price

Accepted Answer

The sum of the values exchanged for the produce is referred to as the "price." In this context, it is the value at which Amos trades his produce for dairy products.

Question 14

Dips in the economy and the instant price comparisons made possible by the Internet have both contributed to ________.
A) decreased consumer price sensitivity
B) increased consumer price sensitivity
C) a less direct relationship between supply and demand
D) a more direct relationship between supply and demand
E) decreased brand loyalty

Accepted Answer

The dips in the economy and instant price comparisons provided by the internet have increased consumer price sensitivity, as customers are more inclined to compare prices and seek the best deals in order to save money.

Question 15

Price elasticity of demand is ________ divided by ________.
A) percent change in quantity demanded; percent change in price
B) demand; price
C) percent change in price; percent change in quantity demanded
D) the going price; the asking price
E) retail value; list price

Accepted Answer

Price elasticity of demand is calculated as the percentage change in quantity demanded divided by the percentage change in price.

Question 16

Which of the following is true about the demand curve?
A) It is used to illustrate the effect of price on the quantity supplied.
B) It is always graphically depicted by a straight line.
C) It shows the quantity of product customers will buy in a market during a period of time even if other factors change.
D) It usually slopes upward and to the right.
E) It shows the relationship between product demand and product price.

Accepted Answer

The demand curve shows the relationship between product demand and product price. It illustrates the quantity of a product that consumers are willing and able to buy at different price levels, ceteris paribus (assuming other factors such as income, taste, and price of related goods, remain constant). The curve usually slopes downward and to the right, indicating that consumers will generally purchase less of a product as the price increases, and more of it as the price decreases.

Question 17

If demand hardly changes with a small change in price,we say the demand is ________.
A) variable
B) inelastic
C) value-based
D) at break-even pricing
E) market penetrating

Accepted Answer

When demand hardly changes with a small change in price, we say the demand is inelastic. This means that even if the price of the product goes up, consumers will continue to buy it. Conversely, if the price of the product decreases, demand won't increase by a significant amount. This is typically true for products that are considered necessities or that have very few substitutes available.

Question 18

When companies set prices,the government and social concerns are two ________ affecting pricing decisions.
A) external factors
B) internal factors
C) economic conditions
D) demand curves
E) temporary influences

Accepted Answer

The government and social concerns are external factors that can impact a company's pricing decisions. Economic conditions and demand curves can also affect pricing, but they were not specifically mentioned in the question. Temporary influences may impact pricing decisions in the short-term, but they are not as significant as external factors. Therefore, A is the best choice.

Question 19

A company should set prices that will allow ________ to receive a fair profit.
A) resellers
B) producers
C) consumers
D) the market
E) competitors

Accepted Answer

The answer of A company should set prices that will...

Question 20

The less ________ the demand,the ________ it benefits the seller to raise the price.
A) focused; more
B) elastic; more
C) elastic; less
D) constant; more
E) concentrated; more

Accepted Answer

When demand is more elastic, it means that a small change in price will lead to a larger change in the quantity demanded. In such a situation, if the seller raises the price, the demand will decrease significantly, and the seller will lose more revenue than they would have gained from the price increase. Hence, it is not beneficial for the seller to raise the price when demand is more elastic.

Quiz 10: Pricing Products: Understanding and Capturing Customer Value

Under ________,the market consists of one seller.

Trader Joe's offers an assortment of exclusive gourmet products at impossibly low prices.These prices are not limited-time offers or special discounts.Instead,they reflect Trader Joe's ________ strategy.

Superior Tires has decided to decrease its prices.The company can expect that ________ for its product will increase.

Buyers are less price sensitive in all of the following situations EXCEPT ________.

The relationship between the price charged and the resulting demand level can be shown as the ________.

If demand changes greatly with a small change in price,we say the demand is ________.

Assume a manufacturer with fixed costs of $100,000,a variable cost of $10,and expected sales of 50,000 units wants to earn a 20 percent markup on sales.What is the manufacturer's markup price?

Xbox 360 decides to add a free subscription to XBOX magazine with every game bought in an effort to differentiate its offering from PS3 games.This is an example of ________.

Firms are less affected by competitors' pricing strategies under than under .

In the aftermath of a recession,consumers may become ________.

The long-run average cost curve (LRAC) helps the producer understand which of the following?

________ describes how responsive demand will be to a change in price.

Amos sells organically grown produce.Often he will trade some of his produce for dairy products produced by other farmers.The sum of the values exchanged for the produce is the ________.

Dips in the economy and the instant price comparisons made possible by the Internet have both contributed to ________.

Price elasticity of demand is divided by .

Which of the following is true about the demand curve?

If demand hardly changes with a small change in price,we say the demand is ________.

When companies set prices,the government and social concerns are two ________ affecting pricing decisions.

A company should set prices that will allow ________ to receive a fair profit.

The less the demand,the it benefits the seller to raise the price.