Question 1

If company A references company B in determining what price to sell its own product at, it exercises which pricing objective?
A) Target market share
B) Survival
C) Revenue maximisation
D) Profit maximisation
E) Status-quo

Accepted Answer

By referencing company B, company A is choosing to maintain the status-quo in terms of pricing. This pricing objective is known as status-quo.

Question 2

Price serves the function of ____ for goods, services, and financial resources.
A) Distributor
B) determining factor
C) Screener
D) Quantifier
E) Allocator

Accepted Answer

Price serves as an allocator by determining how resources are distributed among different uses based on consumers' willingness to pay.

Question 3

Inside the packaging of a Calphalon coffee maker, Ginger finds a paper stating, "All our products will be replaced within the first year if they fail to operate correctly.However, consumer misuse or abuse will effectively end this policy." This is a(n)
A) label.
B) set of instructions for use.
C) statement of guarantee.
D) implied warranty.
E) express warranty.

Accepted Answer

The answer of Inside the packaging of a Calphalon coffee...

Question 4

At a busy intersection in Atlanta, there are four competing gas stations.Each of the stations charges about the same for each gallon of gasoline.The pricing objectives of these firms is
A) survival.
B) market share goals.
C) status-quo pricing.
D) profit maximisation.
E) competitive.

Accepted Answer

Status-quo pricing is when firms set prices similar to competitors to maintain market stability and avoid price wars.

Question 5

If Nordstrom sales associates are there to greet you as soon as you walk through the door, to assist you personally in finding the merchandise you are looking for, and to inform you about the store's events and services, the company is striving to compete on
A) quality.
B) service.
C) promotion.
D) price.
E) distribution.

Accepted Answer

The Nordstrom sales associates are providing personal assistance and information about the store's events and services, which emphasizes the importance of customer service. Therefore, Nordstrom is competing on service.

Question 6

The quantity of a product that a producer is willing to sell at various prices is called
A) supply.
B) inventory.
C) stock.
D) demand.
E) breakeven quantity.

Accepted Answer

The definition of supply is the amount of a product that a producer is willing to sell at various prices, so A is the correct choice. Inventory and stock both refer to the physical amount of products a producer has on hand, not the amount they are willing to sell at different prices. Demand refers to how much consumers are willing to buy at different prices, not how much a producer is willing to sell. Breakeven quantity refers to the minimum amount a producer needs to sell in order to cover their costs, not the amount they are willing to sell at various prices.

Question 7

Polaroid is willing to supply 50 million packs of blank DVDs at €10 each.Buyers are willing to purchase 50 million packs of blank DVDs at €10 each.The €10 price is referred to as the ____ price.
A) equilibrium
B) odd
C) even
D) variable
E) breakeven

Accepted Answer

The price at which the quantity supplied (50 million packs) equals the quantity demanded (50 million packs) is known as the equilibrium price. In this scenario, the price of €10 is the equilibrium price where the market is in balance.

Question 8

If Nabisco had established a pricing objective of selling one out of every three crackers consumed in the world, it would have established an objective based on
A) cash flow.
B) market share.
C) survival.
D) return on investment.
E) euro sales volume.

Accepted Answer

Market share is a common pricing objective that involves capturing a specific percentage of the total market demand for a product or service. In this case, Nabisco's objective of selling one out of every three crackers consumed in the world would be a market share objective.

Question 9

A written explanation of the responsibilities of the producer in the event the product is found to be defective or otherwise unsatisfactory is called a(n)
A) Universal Product Code.
B) label.
C) express warranty.
D) set of instructions.
E) covenant.

Accepted Answer

An express warranty is a written or spoken explanation of the responsibilities of the producer in the event the product is found to be defective or otherwise unsatisfactory. This warranty outlines the responsibilities of the producer to repair or replace the defective product or refund the customer's money.

Question 10

HP considers its extensive line of printers to be superior to other brands.To communicate the product's superior quality, which price may be appropriate for their printers?
A) Low
B) Average
C) Premium
D) Discount
E) Prevailing

Accepted Answer

If HP considers its printers to be superior, it would be appropriate to price them at a premium level to reflect their perceived higher value and quality. Pricing them too low or at a discount could imply that their quality is not as high as other brands, while pricing them at the prevailing or average level may not adequately communicate their superiority.

Question 11

The amount of money that a seller is willing to accept in exchange for a product, at a given time and under given circumstances, is called the
A) revenue.
B) income.
C) discount.
D) price.
E) breakeven quantity.

Accepted Answer

The definition provided in the question perfectly matches the concept of price. Therefore, D is the correct answer. Revenue refers to the total amount of money earned by a seller from the sale of a product, whereas income refers to the profit earned by a seller after deducting all expenses. Discount refers to a reduction in the price of a product, and breakeven quantity is the number of units a seller must sell to cover all the fixed and variable costs.

Question 12

Price competition occurs when a seller emphasises the
A) low price of a product.
B) high price of a product.
C) quality of a product.
D) quality of the customer service.
E) importance of the product.

Accepted Answer

Price competition is focused on promoting the low price of a product in comparison to its competitors.

Question 13

If a company invests €1,000,000 to develop and market a new product with a goal of earning €1,200,000 on the product by the end of the year, it will price the product based on
A) profit expectations.
B) market share goals.
C) return on investment goals.
D) survival goals.
E) objectives.

Accepted Answer

The company's goal of earning $1,200,000 on a $1,000,000 investment by the end of the year indicates a specific return on investment (ROI) goal. Pricing the product to achieve this financial return aligns with return on investment goals.

Question 14

A major drawback of price competition is that
A) it lowers prices.
B) it gains customers.
C) customers equate lower prices with lower quality.
D) competitors can also lower their prices.
E) it generates brand loyalty.

Accepted Answer

The answer of A major drawback of price competition is...

Question 15

Which of the following constitutes an ROI?
A) Amount earned from sales before taxes
B) Amount realised from cutting production costs
C) Amount earned as a result of a return on investment
D) Amount, or ratio, that represents rate of investment
E) Amount earned as gross income

Accepted Answer

ROI stands for "return on investment," which refers to the amount earned as a result of a return on investment. Option A refers to revenue, not ROI. Option B refers to savings, not ROI. Option D refers to the calculation of ROI, not the actual return. Option E refers to income, not ROI.

Question 16

Buyers may relate price to quality.To such a buyer, a higher price for a product is an indicator of
A) suspicious pricing.
B) higher quality.
C) product availability.
D) poor image.
E) greater quantity.

Accepted Answer

Buyers who relate price to quality believe that a higher price indicates higher quality. They are willing to pay more for a product because they believe it is of better quality than a cheaper alternative.

Question 17

The quantity of a product that buyers are willing to purchase at various prices is called
A) breakeven quantity.
B) supply.
C) distended supply.
D) inventory.
E) demand.

Accepted Answer

The definition given matches that of demand, which refers to the willingness and ability of consumers to purchase a certain quantity of a product at different prices. Breakeven quantity refers to the point at which a company's revenue equals its costs, supply is the amount of a product a producer is willing to offer for sale at various prices, distended supply is not a commonly used term in economics, and inventory refers to the stock of goods a company holds for sale.

Question 18

When price helps Josh decide to purchase a Mini Cooper Coupe instead of a Mercedes CLS-Class Coupe because he also wants a Harley-Davidson motorcycle, price serves the function of
A) demander.
B) decision maker.
C) facilitator.
D) intermediation.
E) allocator.

Accepted Answer

Price serves as an allocator by determining how limited resources are distributed among various possible uses. In this scenario, price helps Josh allocate his budget between different desires, leading him to choose the Mini Cooper Coupe over the Mercedes CLS-Class Coupe to also afford a Harley-Davidson motorcycle.

Question 19

____ competition is competition based on factors such as product quality, promotion, customer service, and packaging.
A) Product or brand
B) Price
C) Image
D) Nonprice
E) Strategic

Accepted Answer

Nonprice competition is based on factors other than price, such as product quality, promotion, customer service, and packaging. This type of competition is often used when products are perceived as being similar in quality and features, and competing solely on price would be unprofitable.

Question 20

Walgreens advertises the fact that Bayer aspirin may cost more but works no better than Walgreens own brand of aspirin.In this example, Walgreen's is competing on the basis of
A) selection.
B) packaging.
C) service.
D) price.
E) market share.

Accepted Answer

Walgreens is competing on the basis of price by advertising that their own brand of aspirin is cheaper than the well-known brand Bayer but works just as well.

Quiz 12: Aproduct Development and Pricing Strategies

If company A references company B in determining what price to sell its own product at, it exercises which pricing objective?

Price serves the function of ____ for goods, services, and financial resources.

Inside the packaging of a Calphalon coffee maker, Ginger finds a paper stating, "All our products will be replaced within the first year if they fail to operate correctly.However, consumer misuse or abuse will effectively end this policy." This is a(n)

At a busy intersection in Atlanta, there are four competing gas stations.Each of the stations charges about the same for each gallon of gasoline.The pricing objectives of these firms is

If Nordstrom sales associates are there to greet you as soon as you walk through the door, to assist you personally in finding the merchandise you are looking for, and to inform you about the store's events and services, the company is striving to compete on

The quantity of a product that a producer is willing to sell at various prices is called

Polaroid is willing to supply 50 million packs of blank DVDs at €10 each.Buyers are willing to purchase 50 million packs of blank DVDs at €10 each.The €10 price is referred to as the ____ price.

If Nabisco had established a pricing objective of selling one out of every three crackers consumed in the world, it would have established an objective based on

A written explanation of the responsibilities of the producer in the event the product is found to be defective or otherwise unsatisfactory is called a(n)

HP considers its extensive line of printers to be superior to other brands.To communicate the product's superior quality, which price may be appropriate for their printers?

The amount of money that a seller is willing to accept in exchange for a product, at a given time and under given circumstances, is called the

Price competition occurs when a seller emphasises the

If a company invests €1,000,000 to develop and market a new product with a goal of earning €1,200,000 on the product by the end of the year, it will price the product based on

A major drawback of price competition is that

Which of the following constitutes an ROI?

Buyers may relate price to quality.To such a buyer, a higher price for a product is an indicator of

The quantity of a product that buyers are willing to purchase at various prices is called

When price helps Josh decide to purchase a Mini Cooper Coupe instead of a Mercedes CLS-Class Coupe because he also wants a Harley-Davidson motorcycle, price serves the function of

____ competition is competition based on factors such as product quality, promotion, customer service, and packaging.

Walgreens advertises the fact that Bayer aspirin may cost more but works no better than Walgreens own brand of aspirin.In this example, Walgreen's is competing on the basis of