Question 1

When a seller offers a cash discount with terms of 3/10, n/30, buyers pay approximately a _____ rate of annual interest if they do not take the discount.
A) 3 percent
B) 10 percent
C) 18 percent
D) 36 percent
E) 54 percent

Accepted Answer

The answer of When a seller offers a cash discount...

Question 2

A _____ is a discount on a product that a customer obtains by submitting a form or certificate provided by the seller.
A) countertrade
B) functional discount
C) value price
D) rebate
E) cash discount

Accepted Answer

A rebate is a discount given to the customer after the purchase has been made, typically requiring the submission of a form or certificate to the seller or manufacturer to receive money back.

Question 3

The two types of rebates are:
A) mail-in and coupon.
B) print media and in-store.
C) Internet and print media.
D) manufacturer and reseller.
E) test and promotional.

Accepted Answer

Mail-in and coupon rebates are the two primary types of rebates, where consumers can receive a discount or refund after purchasing a product, either by mailing in a form or using a coupon.

Question 4

Kim just purchased a package containing 10 DVD blank disks. Kim can receive a $5 _____ if she mails in her proof or purchase and her cash register receipt to an address on the box.
A) countertrade
B) functional discount
C) value price
D) rebate
E) cash discount

Accepted Answer

A rebate is a return of part of the purchase price by a seller to a buyer, usually on purchase of a specified quantity or value. It often requires the buyer to submit proof of purchase to the manufacturer to receive the rebate.

Question 5

Last year Jim and his wife Angel both attended the MidSouth Educator's Conference. He, as a college instructor, paid the full price of $199 while his wife paid the spouse price of $89. The sponsors of the conference used:
A) price customization.
B) price fixing.
C) illegal price discrimination.
D) a tying price strategy.
E) promotional pricing.

Accepted Answer

The sponsors used price customization, which involves setting different prices for the same product or service based on certain criteria, in this case, the relationship to a full-paying attendee (spouse).

Question 6

The intent of price customization is to:
A) create a price glass ceiling.
B) establish various prices on the basis of how much value is attached to a product by different people.
C) eliminate the perceptual impact of prestige pricing.
D) eliminate quantity discounts.
E) reward retailers for performing services that are normally performed by manufacturers.

Accepted Answer

Price customization is aimed at setting different prices for the same product based on the perceived value of the product to different customers. This approach recognizes that different customers may value the same product differently and are therefore willing to pay different prices.

Question 7

A recent book on consumer buying habits says, "There's no class consciousness about how you shop anymore. People don't think you're white trash if you shop at discount stores." The fact that social class does not dictate what types of prices a person is willing to pay illustrates the great need for _____ to accommodate different perceptions of value.
A) price customization.
B) price fixing.
C) illegal price discrimination.
D) a tying price strategy.
E) promotional pricing.

Accepted Answer

Price customization allows businesses to accommodate different perceptions of value by adjusting prices for different customers or situations, reflecting the diverse shopping habits mentioned.

Question 8

Why would a manufacturer of snow boots offer a seasonal discount?
A) to encourage off-season orders
B) to comply with the Robinson-Patman Act
C) to encourage customers to buy in large quantities
D) to stimulate customers to pay their bills promptly
E) to avoid having to offer costly promotional allowances

Accepted Answer

Seasonal discounts are often offered to encourage off-season orders, helping manufacturers manage inventory and maintain sales throughout the year.

Question 9

In January, a truckload of seasoned oak for your woodburning stove costs $65.00. If you purchase the same truckload in May, it will only cost you $40.00. This is an example of a:
A) seasonal discount.
B) trade discount.
C) cash discount.
D) promotional allowance.
E) functional discount.

Accepted Answer

This is an example of a seasonal discount because the price of the truckload of seasoned oak varies depending on the time of year, being cheaper in May than in January, which reflects a discount based on the season.

Question 10

For which of the following products would a manufacturer be most likely to offer a seasonal discount?
A) bottles of aspirin
B) steering wheel covers
C) snow parkas
D) fork-lifts
E) rolls of wallpaper

Accepted Answer

Seasonal discounts are often offered on products whose demand fluctuates significantly with the seasons. Snow parkas are a clear example of such products, as their demand peaks during the colder months and declines significantly during warmer seasons, making them prime candidates for seasonal discounts to boost sales during off-peak times or clear out inventory.

Question 11

For which of the following products would a manufacturer be LEAST likely to offer a seasonal discount?
A) Christmas cards
B) ski vacations
C) dictionaries
D) spring-blooming bulbs
E) flea and tick sprays

Accepted Answer

Dictionaries are not seasonal products; their demand does not significantly fluctuate with the seasons, unlike the other options listed, which are tied to specific seasonal activities or holidays.

Question 12

Which of the following is a price reduction granted by a seller in payment for promotional services provided by buyers?
A) a promotional allowance
B) a price differential
C) a cumulative discount
D) price lining
E) a chain discount

Accepted Answer

A promotional allowance is a price reduction or discount given by a seller to a buyer in exchange for the buyer's agreement to perform certain promotional activities. These activities can include advertising, special displays, or other marketing efforts that help to promote the seller's product.

Question 13

A chain of restaurants in San Francisco uses Stroh Ranch Marinade in many of its meat entrees. The chain also sells the marinade in a display next to its cash registers. For every case the restaurant sells, it receives a free bottle for the kitchen. This is an example of a:
A) promotional allowance.
B) forward-dated discount.
C) seasonal discount.
D) rebate.
E) quantity discount.

Accepted Answer

This is an example of a promotional allowance, where the restaurant receives a free bottle for every case sold, as an incentive to promote and sell the marinade.

Question 14

For featuring Lego blocks prominently in its store window, Child's Heaven, a store that carries educational toys, received a free motorized Ferris wheel kit, valued at $50. This is an example of a:
A) promotional allowance.
B) forward-dated discount.
C) seasonal discount.
D) cash discount.
E) quantity discount.

Accepted Answer

A promotional allowance is given to retailers for promoting a manufacturer's product, which in this case is the free motorized Ferris wheel kit given to Child's Heaven for featuring Lego blocks in its store window.

Question 15

Almay's cosmetics paid one-half of the advertising cost for Classique Boutique to run a series of ads on a local radio station. Each of the radio ads emphasized the retailer carried the complete line of Almay products. This would be an example of a:
A) promotional allowance.
B) forward-dated discount.
C) seasonal discount.
D) cash discount.
E) quantity discount.

Accepted Answer

This is an example of a promotional allowance, where a manufacturer (Almay's cosmetics) supports the retailer (Classique Boutique) in advertising efforts financially, typically to promote specific products or lines.

Question 16

The liquor distributor gave the liquor store owner a rubber boat for his children to play in at the lake when the store owner agreed to put up an end-of-aisle display promoting Woodbridge brand wines. This is an example of a:
A) promotional allowance.
B) forward-dated discount.
C) seasonal discount.
D) cash discount.
E) quantity discount.

Accepted Answer

The rubber boat given to the liquor store owner is a form of incentive or reward for agreeing to promote Woodbridge brand wines, which falls under the category of a promotional allowance. This is a common practice where suppliers offer retailers benefits for promoting their products.

Question 17

The _____ prohibits certain forms of price discrimination when it substantially reduces competition.
A) Truth-in-Pricing Act
B) Sherman Act
C) Fair Trade Act
D) Robinson-Patman Act
E) Interstate Amendment to the act that created the Federal Trade Commission

Accepted Answer

The Robinson-Patman Act specifically addresses price discrimination among businesses that may harm competition, by making it illegal to charge different prices to different purchasers of the same product, when the effect may substantially lessen competition or help create a monopoly.

Question 18

The Robinson-Patman Act is of concern primarily to marketers because of its regulation of:
A) monopolies.
B) mergers in restraint of trade.
C) False or misleading advertising.
D) price discrimination.
E) oligopolies.

Accepted Answer

The Robinson-Patman Act specifically addresses price discrimination among buyers when the effect may harm competition. It does not directly address monopolies, mergers, false advertising, or oligopolies.

Question 19

Which of the following statements about the Robinson-Patman Act is True?
A) The act was created to curb the price discrimination practices of large retailers.
B) The act applies only to sales to ultimate household consumers.
C) The act makes all price differentials illegal.
D) Under the act, buyers and sellers automatically are equally guilty and will receive the same punishment for a violation of the act.
E) The act makes many trade discounts illegal.

Accepted Answer

The Robinson-Patman Act was specifically designed to prevent large retailers from using their buying power to obtain more favorable pricing than smaller competitors, thereby addressing price discrimination practices.

Question 20

Which of the following statements about the Robinson-Patman Act is True?
A) According to the act, quantity discounts are the only kind of discount that is always permissible in interstate trade.
B) Under this act, the buyer is as guilty as the seller if the buyer knowingly receives an unlawful price discrimination.
C) The act only applies to intrastate activities.
D) All price differentials are illegal according to this act.
E) The act applies to sales made to middlemen and to ultimate consumers.

Accepted Answer

The Robinson-Patman Act addresses price discrimination in sales. It holds both the seller and the buyer accountable if the buyer knowingly receives a discriminatory price that violates the act.

Quiz 13: Pricing Strategies

When a seller offers a cash discount with terms of 3/10, n/30, buyers pay approximately a _____ rate of annual interest if they do not take the discount.

A _____ is a discount on a product that a customer obtains by submitting a form or certificate provided by the seller.

The two types of rebates are:

Kim just purchased a package containing 10 DVD blank disks. Kim can receive a $5 _____ if she mails in her proof or purchase and her cash register receipt to an address on the box.

Last year Jim and his wife Angel both attended the MidSouth Educator's Conference. He, as a college instructor, paid the full price of $199 while his wife paid the spouse price of $89. The sponsors of the conference used:

The intent of price customization is to:

Why would a manufacturer of snow boots offer a seasonal discount?

In January, a truckload of seasoned oak for your woodburning stove costs $65.00. If you purchase the same truckload in May, it will only cost you $40.00. This is an example of a:

For which of the following products would a manufacturer be most likely to offer a seasonal discount?

For which of the following products would a manufacturer be LEAST likely to offer a seasonal discount?

Which of the following is a price reduction granted by a seller in payment for promotional services provided by buyers?

A chain of restaurants in San Francisco uses Stroh Ranch Marinade in many of its meat entrees. The chain also sells the marinade in a display next to its cash registers. For every case the restaurant sells, it receives a free bottle for the kitchen. This is an example of a:

For featuring Lego blocks prominently in its store window, Child's Heaven, a store that carries educational toys, received a free motorized Ferris wheel kit, valued at $50. This is an example of a:

Almay's cosmetics paid one-half of the advertising cost for Classique Boutique to run a series of ads on a local radio station. Each of the radio ads emphasized the retailer carried the complete line of Almay products. This would be an example of a:

The liquor distributor gave the liquor store owner a rubber boat for his children to play in at the lake when the store owner agreed to put up an end-of-aisle display promoting Woodbridge brand wines. This is an example of a:

The _____ prohibits certain forms of price discrimination when it substantially reduces competition.

The Robinson-Patman Act is of concern primarily to marketers because of its regulation of:

Which of the following statements about the Robinson-Patman Act is True?

Which of the following statements about the Robinson-Patman Act is True?