Question 1

3M launched its premium Greptile Grip golf glove consisting of the highest quality Cabretta sheep leather,it suggested a retail price range of $16.95 to $19.95.Golf glove marketer Bionic had introduced its Classic at $24.95 and its Pro at $39.95,while FootJoy launched its Pure Touch Limited at $28.00 and its SciFlex at $18.00.Other competitors focused on price/value at three price points: $6.00-$9.99,$10.00-$16.99,and $17.00 and up.These statements suggest that 3M has been pursuing a __________ method of selecting an approximate price level.

Accepted Answer

The statement suggests that 3M is considering the prices of its competitors, indicating a competition-based pricing strategy.

Question 2

are the six major steps involved in setting prices?

Accepted Answer

The answer of are the six major steps involved in...

Question 3

explained in "Going Online" box,the Federal Trade Commission (FTC)is especially concerned about the

Accepted Answer

The article states that the Federal Trade Commission (FTC) is specifically concerned about the misuse of the word "free" in promotions, which can be misleading and deceive consumers.

Question 4

practice of charging a very low price for a product with the intent of driving competitors out of business is referred to as

Accepted Answer

Predatory pricing is the practice of charging a very low price for a product with the intention of driving competitors out of business. It is illegal in most countries because it is considered anti-competitive behavior. Price fixing is an agreement between competitors to set prices at a certain level, price discrimination is charging different prices to different customers, deceptive pricing is misleading customers about the price, and geographical pricing is charging different prices based on the location of the customer.

Question 5

practice of offering a bargain that is conditional on the purchase of other products may exist when a buyer is offered the "1-Cent Sale," the "Buy 1,Get 1 Free," or the "Get 2 for the Price of 1" deal.Such pricing is legal only if

Accepted Answer

The practice of offering a bargain that is conditional on the purchase of other products is known as the tie-in sales or tying arrangement. Such pricing is legal only if the first item is sold at the regular price, not inflated for the offer. This ensures that the consumer is genuinely getting a deal and is not being misled by false advertising. The other options are not necessarily requirements for tie-in sales to be legal.

Question 6

Biltmore owns dozens of very successful print shops throughout the Midwest.Biltmore's shops specialize in low-cost black-and-white copies and feature user-friendly machines consumers can easily operate.In recent months,Biltmore has noticed many more competitors in the areas where his stores are located.In an attempt to eliminate the competition,Biltmore has decided to charge a very low price for his black-and-white copies,a price so low his competitors will be forced out of business.After the competition has been driven out,Biltmore plans to raise the price of his copies.Biltmore is planning to engage in the illegal and unethical practice of

Accepted Answer

Biltmore is engaging in predatory pricing, which involves setting prices so low that competitors are driven out of business, after which prices are raised to monopolistic levels. This is considered illegal and unethical because it harms competition and limits consumer choice.

Question 7

common forms of pricing include: bait and switch,bargains conditional on other purchases,comparable value comparisons,comparisons with suggested prices,and former price comparisons.What do all these practices have in common? They are all

Accepted Answer

These practices are often considered deceptive or misleading, making them illegal in many jurisdictions, and they can be difficult to prosecute due to the need for clear evidence of intent to deceive.

Question 8

Price deals that mislead consumers fall into the category of

Accepted Answer

Price deals that mislead consumers fall into the category of deceptive pricing, which is characterized by pricing techniques that aim to create a false impression that a product is being offered at a lower price than what is actually the case.

Question 9

Which of the following statements about geographical pricing is most accurate?

Accepted Answer

FOB origin pricing (where the buyer pays shipping costs from the seller's location) is legal, while FOB freight-allowed pricing (where the seller pays shipping costs to a certain point and the buyer pays the remainder) may be illegal. Geographical pricing in general is not inherently illegal, but may come under scrutiny if it is seen as discriminatory or anti-competitive. Basing-point pricing, as well as other forms of geographical pricing, may be subject to various legal restrictions.

Question 10

a seller represents a price as reduced,the item must have been offered in good faith at a higher price for a substantial previous period.Former price comparisons are deceptive if

Accepted Answer

This choice states that a high price was set for the purpose of establishing a reference for a price reduction, which is exactly what the scenario describes as deceptive. The other choices do not address this issue.

Question 11

3M decided the retail price for the Greptile Grip golf glove would be $16.95 and then worked backward through markups taken by retailers and wholesalers to determine what price it can charge wholesalers for the product,the firm would most likely be practicing a __________ strategy.

Accepted Answer

This scenario describes target pricing, which involves determining the desired retail price and then working backward to determine the allowable cost and wholesale price. This strategy ensures that the product is priced competitively in the market while still generating enough profit for the company.

Question 12

promote their business,some psychics advertise free tarot-card readings and other insights into their customers' futures on television.Unfortunately,this "free reading" has cost some unsuspecting callers as much as $700 in phone charges.This sort of deceptive pricing practice would be primarily monitored by the

Accepted Answer

The Federal Trade Commission (FTC) is responsible for monitoring deceptive advertising and pricing practices, which includes false claims and hidden fees. Therefore, the deceptive pricing practice of offering a "free reading" that ultimately costs hundreds of dollars in phone charges would fall under the jurisdiction of the FTC.

Question 13

Advertising such as "Retail Value $100,Our Price $85" is deceptive if

Accepted Answer

The claim of a "Retail Value $100" is deceptive if a verified and substantial number of stores in the market area did not price the item at $100. This implies that the claimed retail value is false or misleading.

Question 14

a firm offers a very low price on a product to attract customers to a store,and once in the store,the customer is persuaded to purchase a higher-priced item,the practice is referred to as

Accepted Answer

This practice is called bait and switch. It involves baiting customers with a very low price or an attractive offer, then switching them to a higher-priced item once they are in the store. This tactic is considered deceptive and unethical.

Question 15

Predatory pricing is

Accepted Answer

Predatory pricing is the practice of selling a product at a very low price with the intention of driving competitors out of business. It is seen as anti-competitive behavior and is illegal in many countries.

Question 16

Deceptive pricing practices are outlawed by legislation and enforced by which federal agency?

Accepted Answer

Deceptive pricing practices are enforced by the Federal Trade Commission (FTC), which is responsible for protecting consumers from fraudulent and misleading advertising and business practices. The FTC sets guidelines for pricing and advertising, investigates complaints, and takes legal action against companies that violate the law.

Question 17

the early 1980s,typical round-trip coach airfares from the East Coast to London were more than $500.Then Freddie Laker introduced the People's Express,a competing service into Newark at $350.Major airlines matched his price-and continued to do so until they drove People's Express out of business.Then prices shot back up to over $500.A lawsuit filed under the Sherman Act resulted in the judgment that the major airlines had explicitly tried to destroy a competitor.The experience of People's Express is an example of __________ on the part of the major airlines

Accepted Answer

Predatory pricing is a strategy used by dominant firms to drive out competitors from the market by pricing at below-cost levels for a long period. In this case, the major airlines matched the low fares of People's Express until they went out of business, and then increased their prices back to their previous levels. The judgment against them concluded that this was an explicit attempt to destroy a competitor, making it an example of predatory pricing.

Question 18

Predatory pricing refers to

Accepted Answer

Predatory pricing is the practice of charging a very low price for a product with the intent of driving competitors out of business. This is done to eventually increase prices and reduce competition in the market.

Question 19

hardware store advertises a ⅜" Black and Decker Power Drill for $29.95.You enter the store intending to purchase the drill.The salesperson informs you that they are all sold out.She tells you that the "sale" drills were factory seconds and that if you are going to be doing any kind of serious woodworking,you should buy the Model 3309,which sells for $49.99.This scenario has elements of which type of deceptive pricing?

Accepted Answer

This scenario has elements of bait and switch pricing because the store initially advertised a lower-priced item but then tried to convince the customer to purchase a more expensive item by claiming that the advertised item was sold out or defective.

Question 20

claim that a price is below a manufacturer's suggested or list price may be deceptive if

Accepted Answer

Claiming that a price is below a manufacturer's suggested or list price may be deceptive if few or no sales occur at that price in a retailer's market area. This means that the retailer is falsely portraying the item as being on sale or discounted, when in reality it is being sold at its typical price.

Quiz 14: Arriving at the Final Price