Question 1

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 promoting its own brand of aspirin as a more cost-effective alternative to Bayer aspirin.

Question 2

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) dollar sales volume.

Accepted Answer

Selling one out of every three crackers consumed in the world is a market share objective, meaning Nabisco wants to capture a significant portion of the market share in the cracker industry.

Question 3

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 statement from the producer about the quality and performance of the product. This includes information about the producer's responsibilities in the event the product is found to be defective or unsatisfactory, such as offering a refund, repair, or replacement.

Question 4

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 price is the amount of money that a seller is willing to accept in exchange for a product, at a given time and under given circumstances. The other options are not necessarily related to the specific amount paid for a product. Revenue is the total income generated by sales, income refers to the money earned by an individual or business, discount is a deduction from the regular price, and breakeven quantity is the point where total revenue equals total costs.

Question 5

Which of the following constitutes an ROI?
A) Amount earned from sales before taxes
B) Amount realized 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. It is typically measured as a percentage of the initial investment. A and E are not necessarily indicative of ROI, as they only represent income and not return on investment. B and D are also not ROI, as they do not necessarily represent return on investment, but rather cost savings or investment rates.

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 quantity of a product that a producer is willing to sell at various prices is called supply. Supply represents the amount of goods or services that producers are willing to bring to the market at different prices. As prices increase, quantity supplied usually increases as well, reflecting the idea that producers are willing to produce more if they can sell their products for higher prices.

Question 7

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 maximization.
E) competitive.

Accepted Answer

The pricing strategy described, where all gas stations charge about the same amount for gasoline, is known as status-quo pricing. This approach aims to maintain existing prices and avoid price wars among competitors, focusing on stabilizing market share rather than aggressively competing on price.

Question 8

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 $10 price is the equilibrium price because it is the price at which the quantity supplied (50 million) equals the quantity demanded (50 million), indicating that supply and demand are in balance.

Question 9

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 10

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 quantity of a product that buyers are willing to purchase at various prices is called demand. It represents the relationship between the price of a good or service and the quantity demanded by consumers.

Question 11

____ 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 refers to the use of marketing techniques and other factors like product quality, promotion, customer service, and packaging to compete with a rival firm in the market. Choice A (Product or brand) could be a close second as it also encompasses the quality and packaging aspects of nonprice competition, but it doesn't explicitly mention other aspects such as promotion and customer service. Choice B (Price) and C (Image) are not relevant to the definition of nonprice competition. Choice E (Strategic) is too broad and not specific to the given definition.

Question 12

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 goods, services, and financial resources are distributed among various users. It allocates resources by signaling where they are most valued and needed based on willingness and ability to pay.

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

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

HP's claim of superior quality suggests a premium price point. A higher price conveys value and quality to consumers and can even be seen as an indicator of superior quality.

Question 15

In cost-based pricing, a producer adds an amount to the total production cost to provide a profit. The amount added to the production cost is called a
A) discount.
B) markup.
C) variable cost.
D) differentiation.
E) price line.

Accepted Answer

The amount added to the production cost for profit is called a markup.

Question 16

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 maximization
D) Profit maximization
E) Status-quo

Accepted Answer

Company A exercises the status-quo pricing objective. This means that the company sets a price similar to its competitors in order to maintain its current market share and avoid any price wars. By referencing company B, company A is simply following the existing pricing strategies in the market, rather than aiming for any specific market share, revenue or profit.

Question 17

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 18

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 perceive a higher price as an indicator of higher quality. This is a common consumer behavior where consumers tend to associate expensive products with being of higher quality.

Question 19

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

Nordstrom's emphasis on personalized customer service sets them apart from competitors and indicates a focus on competing on superior service.

Question 20

Price competition occurs when a seller emphasizes 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 occurs when a seller emphasizes the low price of a product, as they are trying to attract customers by offering a lower price compared to their competitors.

Quiz 13: A: Creating and Pricing Products That Satisfy Customers

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

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)

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

Which of the following constitutes an ROI?

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

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

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 major drawback of price competition is that

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

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

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

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

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?

In cost-based pricing, a producer adds an amount to the total production cost to provide a profit. The amount added to the production cost is called a

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

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

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

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

Price competition occurs when a seller emphasizes the