Question 1

Which of the following is NOT an objective for service pricing?
A)Build supply.
B)Build demand.
C)Seek profit.
D)Cover costs.
E)Build a user base.

Accepted Answer

Building supply is not an objective for service pricing. The other options, such as building demand, seeking profit, covering costs, and building a user base are all common objectives of service pricing.

Question 2

Price elasticity is computed as ____________.
A)percentage change in demand / percentage change in price
B)percentage change in price / percentage change in demand
C)percentage change in supply / percentage change in price
D)percentage change in demand / percentage change in supply
E)percentage change in price / percentage change in supply

Accepted Answer

Price elasticity is computed as the percentage change in demand divided by the percentage change in price. This formula helps to measure the sensitivity of demand for a product to changes in its price. Therefore, option A, which represents the percentage change in demand divided by the percentage change in price, is the best choice.

Question 3

____________ recognizes that resource expenses are linked to the variety and complexity of goods and services produced and not just on physical volume.
A)Break-even analysis
B)Variable cost
C)Fixed cost
D)Activity-based costing
E)Semi-fixed cost

Accepted Answer

Activity-based costing recognizes that resource expenses are linked to the variety and complexity of goods and services produced, taking into account the activities required to produce them, rather than just a straightforward physical volume measure.

Question 4

Shopbots help consumers combat dynamic pricing online.

Accepted Answer

Shopbots are price comparison tools that help consumers find the best deals on products online. They can also help consumers combat dynamic pricing which is when retailers change prices based on factors such as location, time of day, and browsing history. Shopbots can compare prices across different retailers and help consumers find the best deal, even if dynamic pricing is at play.

Question 5

Revenue management is the most effective when applied to firms characterized by all the following conditions EXCEPT ______________.
A)perishable inventory
B)relatively fixed capacity
C)varying customer price sensitivity
D)fixed inventory
E)variable demand

Accepted Answer

Revenue management is only effective when there is perishable inventory, relatively fixed capacity, varying customer price sensitivity, and variable demand. Fixed inventory is not a characteristic that allows for effective revenue management.

Question 6

Psychological costs relate to unpleasant sensations affecting any of the five senses.

Accepted Answer

Psychological costs are related to negative emotions, mental stress, and fatigue caused by a particular action or decision. They are not related to unpleasant sensations affecting the five senses.

Question 7

Customers often incur significant financial costs in searching for,purchasing,and using a service,above and beyond the purchase price paid to the supplier.

Accepted Answer

This statement is true. Customers may incur costs such as transportation to the location of the service, time spent researching the service, and any additional fees or expenses associated with using the service.

Question 8

Shopbots collect price and product information from multiple electronic vendors and provide it to consumers.

Accepted Answer

Shopbots or shopping bots are designed to collect and compare prices and product information from multiple electronic vendors and present the information to consumers to help them make informed purchasing decisions.

Question 9

____________ refers to the practice of price discrimination.
A)Critical ratio pricing
B)Dynamic pricing
C)Collective pricing
D)Fixed pricing
E)Classical pricing

Accepted Answer

Dynamic pricing is the practice of charging different prices to different customers depending on various factors such as demand, time of day, location, etc. It is a form of price discrimination where businesses try to maximize their profits by charging customers the price they are willing to pay, rather than a fixed price for everyone.

Question 10

Which of the following reduces price competition?
A)Increasing the number of competitors.
B)Increasing the number of substituting offers.
C)Wider distribution of competitor and/or substitution offers.
D)High switching costs for consumers.
E)Increasing surplus capacity in the industry.

Accepted Answer

High switching costs for consumers reduce price competition because it makes it more difficult for consumers to switch to a different product or service, even if it is cheaper. This reduces the incentive for competitors to lower their prices in order to attract customers.

Question 11

Which of the following is NOT an example of a non-physical fence?
A)Time or duration of use.
B)Group membership.
C)Service level.
D)Flexibility of ticket usage.
E)Location of reservation.

Accepted Answer

The answer of Which of the following is NOT an...

Question 12

Because quality is subjective,all customers have the expertise to assess the quality and value they receive.

Accepted Answer

Quality is subjective, but not all customers have the expertise or knowledge to accurately assess the quality and value of a product or service, as this can depend on specific industry knowledge, experience, or technical understanding.

Question 13

Customers will often pay more for services than they think they are worth.

Accepted Answer

The answer of Customers will often pay more for services...

Question 14

Which of the following intensifies price competition?
A)Non-price-related costs of using competing alternatives are high.
B)Wider distribution of competitor and or substitution offers.
C)Personal relationships have been established.
D)Switching costs are high.
E)Customer need for time and location specificity.

Accepted Answer

Wider distribution of competitor and/or substitution offers means that customers have more options to choose from, which intensifies price competition as companies try to attract customers through lower prices.

Question 15

Firms that are always reacting to competitors' price changes run the risk of pricing higher than might really be necessary.

Accepted Answer

Firms that are always reacting to competitors' price changes might actually risk pricing lower than necessary, as they may engage in unnecessary price wars or undercutting, potentially leaving money on the table by not maximizing their price based on value or demand.

Question 16

____________ is defined as the sum of all the perceived benefits minus the sum of all the perceived costs of service.
A)Net value
B)Consumer surplus
C)Gross value
D)Moderate value
E)Consumer demand

Accepted Answer

The answer of ____________ is defined as the sum of...

Question 17

Firms do not need to consider post-purchase costs,as they occur after the firm has already secured a purchase.

Accepted Answer

Firms do need to consider post-purchase costs, as they can have a significant impact on customer satisfaction, repeat business, and the overall profitability of the firm. These costs include things like customer service, repairs and maintenance, and disposal or recycling of the purchased product. Ignoring these costs can lead to unhappy customers, negative reviews, and increased expenses for the firm in the long run.

Question 18

Business owners often fail to recognize the fixed costs that need to be recouped when providing service.

Accepted Answer

Fixed costs such as rent, utilities, and equipment are often overlooked when pricing services, leading to a failure to recoup these costs.

Question 19

Pricing is less complex in services than it is in manufacturing.

Accepted Answer

Pricing in services can be more complex than in manufacturing due to factors such as intangible components, personalized pricing, and variations in customer needs and behavior.

Question 20

What three components are considered in a pricing strategy?

Accepted Answer

The answer of What three components are considered in a...

Quiz 6: Setting Prices and Implementing Revenue Management

Which of the following is NOT an objective for service pricing?

Price elasticity is computed as ____________.

____________ recognizes that resource expenses are linked to the variety and complexity of goods and services produced and not just on physical volume.

Shopbots help consumers combat dynamic pricing online.

Revenue management is the most effective when applied to firms characterized by all the following conditions EXCEPT ______________.

Psychological costs relate to unpleasant sensations affecting any of the five senses.

Customers often incur significant financial costs in searching for,purchasing,and using a service,above and beyond the purchase price paid to the supplier.

Shopbots collect price and product information from multiple electronic vendors and provide it to consumers.

____________ refers to the practice of price discrimination.

Which of the following reduces price competition?

Which of the following is NOT an example of a non-physical fence?