Question 1

When a seller establishes a series of prices for a type of merchandise,it creates an odd-even pricing.

Accepted Answer

Odd-even pricing is a psychological pricing strategy where prices are set just below a round number, such as $9.99 instead of $10.00, to make them appear cheaper. Establishing a series of prices is not the same as odd-even pricing.

Question 2

Basing-point pricing is a price tactic that offers all goods and services at the same price or perhaps two or three prices.

Accepted Answer

Basing-point pricing is a pricing strategy where the price of a product is determined by adding a shipping cost from a specific location, regardless of the actual point of origin. It does not involve offering goods at the same price or a limited number of prices.

Question 3

Zone pricing is a modification of uniform delivered pricing,and it divides the United States (or the total market)into segments (or zones)and charges a flat freight rate to all customers in a given zone.

Accepted Answer

Zone pricing is indeed a variation of uniform delivered pricing where the market is divided into zones, and a consistent freight rate is applied within each zone.

Question 4

Because of its recent high growth in the national market,Mable Inc.,an online cosmetics retailer,has divided its U.S.market into segments and is charging a flat freight rate to all customers in a given segment.In this scenario,Mable Inc.plans to adopt freight absorption pricing.

Accepted Answer

Freight absorption pricing involves the seller absorbing some or all of the freight costs to reduce the price for the buyer, not charging a flat rate to all customers in a segment.

Question 5

Gwenta Corp.,a soft drink manufacturing company,pays a certain quarterly amount to its distributors who display the soft drink's latest ad on their distribution trucks.This quarterly payment is referred to as a noncumulative quantity discount.

Accepted Answer

A noncumulative quantity discount is a price reduction based on the quantity purchased over a single order, not related to advertising payments.

Question 6

Break-even analysis is the method of determining the cost of buying the product from the producer,plus amounts for profit and for expenses not otherwise accounted for.

Accepted Answer

Break-even analysis is a financial calculation to determine the point at which revenue received equals the costs associated with receiving the revenue, not the cost of buying the product plus profit and expenses.

Question 7

A rebate is a discount to wholesalers and retailers for performing channel functions.

Accepted Answer

A rebate is a partial refund to consumers after a purchase, not a discount to wholesalers and retailers.

Question 8

Define what is meant by consumer penalties and provide reasons why companies would impose them on consumers.

Accepted Answer

The answer of Define what is meant by consumer penalties...

Question 9

A trade discount is a payment to a dealer for promoting the manufacturer's products.

Accepted Answer

A trade discount is a reduction in the listed price of goods or services offered by a manufacturer to a dealer or retailer, not a payment for promotion.

Question 10

Describe what is meant by "base price," and explain the concept of price lining as a pricing tactic for fine-tuning the base price and offsetting rising costs.

Accepted Answer

The answer of Describe what is meant by "base price,"...

Question 11

Psychological pricing is marketing two or more products in a single package for a special price.

Accepted Answer

Psychological pricing refers to strategies that create an illusion of value or savings, such as pricing something at $9.99 instead of $10.00. The concept described is known as "bundle pricing."

Question 12

For businesses,consumer penalties are part of doing business in a highly competitive marketplace.

Accepted Answer

Consumer penalties, such as late fees or cancellation charges, are often used by businesses as a strategy to manage customer behavior and protect their interests in a competitive market.

Question 13

When a seller establishes a series of prices for a type of merchandise,a purchase agreement is violated.

Accepted Answer

A purchase agreement is typically violated when the terms and conditions agreed upon by the buyer and seller are not met. Establishing a series of prices does not inherently violate an agreement unless it contradicts specific terms within that agreement.

Quiz 19: Pricing Concepts