Question 1

Developing a good pricing strategy is essential to the financial well-being of a firm.Even though a firm has an excellent strategy,what are continuing threats to the strategy?

Accepted Answer

The answer of Developing a good pricing strategy is essential...

Question 2

Why might it be considered more fun and challenging for a marketer to be part of a market characterized by monopolistic competition than be part of one characterized by pure competition?

Accepted Answer

The answer of Why might it be considered more fun...

Question 3

The point at which the number of units sold generates enough revenue to equal the total costs of running an operation is known as the
A) contribution per unit.
B) fixed cost margin.
C) break-even point.
D) unit cost.
E) marginal revenue.

Accepted Answer

The break-even point refers to the level of sales at which a company neither makes a profit nor incurs a loss. At this point, the total revenue earned is equal to total costs incurred. Therefore, option C is the correct answer. The other options are not appropriate because contribution per unit, fixed cost margin, unit cost, and marginal revenue are not directly related to the point at which a company breaks even.

Question 4

What five components should be taken into consideration when a company is developing its pricing objectives?

Accepted Answer

The answer of What five components should be taken into...

Question 5

Small-business consultants are constantly admonishing would-be entrepreneurs,"Beware of the overhead." Using an overhead (fixed costs)of $100,000 and then an overhead of $200,000,with a contribution per unit of $50,determine the break-even points.

Accepted Answer

The answer of Small-business consultants are constantly admonishing would-be entrepreneurs,"Beware...

Question 6

Brandon is conducting an experiment,charging different prices for the same products at different stores and measuring sales.With this information,he will construct a demand curve.How can Brandon use this information?

Accepted Answer

The answer of Brandon is conducting an experiment,charging different prices...

Question 7

If upscale manufacturers of prestige products like BMW autos,Tiffany glass,or Rolex watches offered lower-priced products,what might happen to the demand for their products? Why?

Accepted Answer

The answer of If upscale manufacturers of prestige products like...

Question 8

Fenton has always used standard markups to determine the prices for his clothing products.You are advising him to change his pricing strategy.What advice would you give Fenton?

Accepted Answer

The answer of Fenton has always used standard markups to...

Question 9

Karen initially charged $80 for an hour-long massage and averaged 20 clients per week.When she raised her price to $100,the number of massages decreased to 15 per week.What is the price elasticity of demand for her service?

Accepted Answer

The answer of Karen initially charged $80 for an hour-long...

Question 10

Suppose that a friend asks you to drive him to the airport this weekend so he can catch a flight.He pays you for the gas used driving to the airport,and for the cost of parking the car at the airport while you help him in with his bags.He then declares that you are now "even," since he has fully compensated you for any costs you incurred in helping him get to his flight.From your perspective,what aspects of the "price" of taking your friend to the airport has he omitted?

Accepted Answer

The answer of Suppose that a friend asks you to...

Question 11

Explain the difference between fixed and variable costs and provide examples of each.

Accepted Answer

The answer of Explain the difference between fixed and variable...

Question 12

Joe's Deli is trying to compete with the local Subway store.When Subway offers lower prices on certain sandwiches during its "customer appreciation month," Joe's Deli reduces the price of its similar subs in order to compete.What pricing orientation is being utilized by Joe's Deli?

Accepted Answer

The answer of Joe's Deli is trying to compete with...

Question 13

Raymond estimates the fixed costs associated with opening a new bank branch are $500

Accepted Answer

The answer of Raymond estimates the fixed costs associated with...

Question 14

When the major league baseball season opens in April,teams that are located in the Midwest and Northeast are still experiencing colder and frequent rainy weather.This often results in fewer fans attending these April games.What can these ball clubs do to maximize their revenue during this time period?

Accepted Answer

The answer of When the major league baseball season opens...

Question 15

How is the price elasticity for Crest toothpaste likely to be different from the price elasticity for all toothpastes (a product category)? Why are they likely to be different?

Accepted Answer

The answer of How is the price elasticity for Crest...

Question 16

Diane owns a bakery where she sells cupcakes.Two blocks down there is another bakery,CC's Bakery,that sells cupcakes for $1 less than Diane.Diane decides to lower her price and match CC's Bakery prices.What type of pricing strategy is Diane implementing?
A) internal pricing
B) profit-oriented pricing
C) competitor-oriented pricing
D) customer-oriented pricing
E) sales-oriented pricing

Accepted Answer

Diane is implementing a competitor-oriented pricing strategy by matching the price of CC's Bakery to remain competitive in the market.

Question 17

Most public colleges charge less than half the price of similar private colleges.How can each type of college be delivering value?

Accepted Answer

The answer of Most public colleges charge less than half...

Question 18

The commercial airline industry is considered what type of market?
A) duopoly
B) monopoly
C) monopolistic competition
D) pure competition
E) oligopolistic competition

Accepted Answer

The commercial airline industry is dominated by a few large firms such as Delta, American, United, and Southwest, which indicates oligopolistic competition. These firms have a significant influence on the airline industry and can impact the prices, services, and routes offered. Additionally, barriers to entry are high, further cementing the dominance of these large firms.

Question 19

What methods might a firm use when pricing based on a profit orientation and how do they differ?

Accepted Answer

The answer of What methods might a firm use when...

Question 20

How is consumer behavior affected by the "income effect"?

Accepted Answer

The answer of How is consumer behavior affected by the...

Quiz 14: Pricing Concepts for Establishing Value