Question 1

-In Figure 11-6 above, which is a break-even chart that depicts a graphic presentation of a break-even analysis for a picture frame store, the triangular area GAF represents the firm's

Accepted Answer

The triangular area GAF represents the firm's profit, as it is the area above the break-even point where total revenue exceeds total costs.

Question 2

All of the following are examples of pricing objectives EXCEPT:

Accepted Answer

The answer of All of the following are examples of...

Question 3

Pricing objectives refer to

Accepted Answer

Pricing objectives specify the role of price in an organization's marketing and strategic plans. They outline what the company is trying to achieve through their pricing strategy, such as increasing market share, maximizing profits, or creating perceived value in the minds of consumers.

Question 4

Jason decided to open a small Internet café serving a variety of unusual nonalcoholic beverages from around the world. He set a goal to break-even within the first six months and make a moderate profit thereafter. Within a week of opening, every seat was filled and he had to replenish inventory several times. At his six-month review, he was devastated to find that despite huge sales, he had actually lost money. His math was not wrong, but he had failed to include monthly expenses such as toilet paper, paper towels, and hand soap in his calculations. These costs should have appeared as __________ in his break-even analysis.

Accepted Answer

Toilet paper, paper towels, and hand soap are consumable items that need to be regularly replenished and are directly proportional to the level of sales. Hence, they are variable costs that should have been accounted for in the break-even analysis.

Question 5

-Suppose you are the owner of a picture frame store. Let's assume that the average price customers are willing to pay for each picture frame is $120. Also, suppose your fixed costs (FC) total $32,000 (real estate taxes, interest on a bank loan, etc.) and unit variable cost (UVC) for a picture frame is $40 (labor, glass, frame, and matting). According to Figure 11-6 above, how much profit will your picture frame store make if it sells 400 picture frames?

Accepted Answer

The answer of

-Suppose you are the owner of a...

Question 6

Three pricing objectives relate to a firm's profit. In one known as __________, a company gives up immediate profit in exchange for achieving a higher market share in the hopes of penetrating competitive markets.

Accepted Answer

The pricing objective described in the question refers to the strategy of managing for long-run profits. This involves sacrificing immediate profits by setting lower prices in order to gain market share and establish the company as a dominant player in the market, with the ultimate goal of earning higher profits in the long term. Therefore, the correct answer is E.

Question 7

-Suppose you are the owner of a picture frame store. Let's assume that the average price customers are willing to pay for each picture frame is $120. Also, suppose your fixed costs (FC) total $32,000 (real estate taxes, interest on a bank loan, etc.) and unit variable cost (UVC) for a picture frame is $40 (labor, glass, frame, and matting). Figure 11-6 above shows that by selling 200 pictures, your picture frame store will

Accepted Answer

The answer of

-Suppose you are the owner of a...

Question 8

A firm's profit objective is often measured in terms of ROA. The acronym ROA stands for __________.

Accepted Answer

ROA stands for "return on assets," which is a measure of profitability that calculates how efficiently a company uses its assets to generate earnings. It is commonly used as a benchmark to compare the profitability of similar companies within an industry.

Question 9

Suppose you are the owner of a picture frame store and you wish to calculate how many pictures you must sell to cover your fixed and variable costs at a given price. Let's assume that the demand for your pictures is strong, so the average price customers are willing to pay for each picture frame is $120. Also, suppose your fixed costs (FC) total $32,000 (real estate taxes, interest on a bank loan, etc.) and unit variable cost (UVC) for a picture frame is $40 (labor, glass, frame, and matting). If your picture frame store sold 2,000 picture frames, what would your profit or loss be?

Accepted Answer

The answer of Suppose you are the owner of a...

Question 10

-In Figure 11-6 above, which is a break-even chart that depicts a graphic presentation of a break-even analysis for a picture frame store, the area CGD represents the firm's

Accepted Answer

The answer of

-In Figure 11-6 above, which is a...

Question 11

Assuming there is no change in a product's price or the quantity demanded, if a business owner wants to increase her advertising expenses to a by $500 monthly, this would cause total costs to __________ and the break-even quantity to __________.

Accepted Answer

Increasing advertising expenses will increase total costs. To cover these higher costs, the business will need to sell more units, thus increasing the break-even quantity.

Question 12

-Suppose you are the owner of a picture frame store. Let's assume that the average price customers are willing to pay for each picture frame is $120. Also, suppose your fixed costs (FC) total $32,000 (real estate taxes, interest on a bank loan, etc.) and unit variable cost (UVC) for a picture frame is $40 (labor, glass, frame, and matting). Figure 11-6 above shows that by selling 800 picture frames, you will

Accepted Answer

To determine the breakeven point, we need to use the formula:

Breakeven point = Fixed costs / (Price - Unit Variable Cost)

Breakeven point = 32,000 / (120 - 40) = 400

This means that you need to sell 400 picture frames to cover your fixed and variable costs. However, the question states that you will sell 800 picture frames, which means you will sell more than the breakeven point. Therefore, you will earn a profit.

Question 13

A firm's profit objective is often measured in terms of ROI. The acronym ROI stands for __________.

Accepted Answer

ROI stands for Return on Investment, which is a profitability ratio calculated as the net profit divided by the total amount invested. It is a common measure used in financial analysis to evaluate the efficiency of an investment or compare the profitability of different investments.

Question 14

Three different objectives relate to a firm's profit, which have different implications for pricing strategy. The three profit-oriented objectives include __________, managing current profit, and achieving a target return.

Accepted Answer

Managing for long-run profits focuses on maximizing profits over an extended period of time. This objective may involve setting lower prices initially to gain market share and increase demand, with the expectation of generating higher profits in the long run. Accumulating profits and reinvesting profits may also be strategies used to achieve this objective, but they are not specifically focused on long-term profitability. Achieving a target return, on the other hand, may involve setting higher prices to ensure that the firm reaches its desired level of profit within a given time frame, but this objective does not necessarily prioritize long-term profitability. Maximizing gross margin is also a profit-oriented objective, but it only focuses on increasing the difference between revenue and cost of goods sold, and may not necessarily result in overall higher profits.

Question 15

-In Figure 11-6 above, which is a break-even chart that depicts a graphic presentation of a break-even analysis for a picture frame store, the rectangular area EBCD represents the firm's

Accepted Answer

The rectangular area EBCD represents the firm's fixed costs.

Question 16

Specifying the role of price in an organization's marketing and strategic plans is referred to as

Accepted Answer

Setting pricing objectives involves determining the role of price in an organization's marketing and strategic plans. This includes identifying the target market and positioning, as well as determining pricing strategies that align with overall business objectives. This process helps ensure that pricing decisions are aligned with the organization's goals and priorities.

Question 17

-In Figure 11-6 above, which is a break-even chart that depicts a graphic presentation of a break-even analysis for a picture frame store, the triangular area FBE represents the firm's

Accepted Answer

The answer of

-In Figure 11-6 above, which is a...

Question 18

Which of the following statements regarding pricing objectives is most accurate?

Accepted Answer

Pricing objectives may change depending on the financial position of the company. This is because the pricing objectives need to align with the overall company objectives, which may change over time based on financial performance and other factors. For example, if the company is experiencing financial difficulties, it may need to adjust pricing objectives to focus on maximizing revenue or profitability in the short term, even if this means sacrificing market share.

Question 19

Suppose you are the owner of a picture frame store and you wish to calculate how many pictures you must sell to cover your fixed and variable costs at a given price. Demand for pictures is strong, so the average price customers are willing to pay for each picture frame is $120. Also, suppose your fixed costs (FC) total $32,000 (real estate taxes, interest on a bank loan, etc.) and unit variable cost (UVC) for a picture frame is $40 (labor, glass, frame, and matting). What is the quantity of picture frames you will need to sell to break-even?

Accepted Answer

The answer of Suppose you are the owner of a...

Question 20

While pricing objectives frequently reflect corporate goals, pricing constraints often relate to

Accepted Answer

Pricing constraints are factors that limit a company's ability to set prices as it desires. These constraints are external, uncontrollable factors that affect pricing decisions, and they typically stem from the market and the competition. For instance, supply and demand, cost of production, and customer expectations are all pricing constraints that a company must consider when setting prices. Therefore, pricing constraints often relate to conditions existing in the marketplace. Stockholder demands, political ideology, an organization's code of ethics, and financial realities within the organization itself are internal factors that may influence pricing objectives but are not constraints limiting pricing decisions.

Quiz 11: Pricing Products and Services

-In Figure 11-6 above, which is a break-even chart that depicts a graphic presentation of a break-even analysis for a picture frame store, the triangular area GAF represents the firm's

All of the following are examples of pricing objectives EXCEPT:

Pricing objectives refer to

Three pricing objectives relate to a firm's profit. In one known as __________, a company gives up immediate profit in exchange for achieving a higher market share in the hopes of penetrating competitive markets.

A firm's profit objective is often measured in terms of ROA. The acronym ROA stands for __________.

-In Figure 11-6 above, which is a break-even chart that depicts a graphic presentation of a break-even analysis for a picture frame store, the area CGD represents the firm's

Assuming there is no change in a product's price or the quantity demanded, if a business owner wants to increase her advertising expenses to a by $500 monthly, this would cause total costs to and the break-even quantity to .

A firm's profit objective is often measured in terms of ROI. The acronym ROI stands for __________.

Three different objectives relate to a firm's profit, which have different implications for pricing strategy. The three profit-oriented objectives include __________, managing current profit, and achieving a target return.

-In Figure 11-6 above, which is a break-even chart that depicts a graphic presentation of a break-even analysis for a picture frame store, the rectangular area EBCD represents the firm's

Specifying the role of price in an organization's marketing and strategic plans is referred to as

-In Figure 11-6 above, which is a break-even chart that depicts a graphic presentation of a break-even analysis for a picture frame store, the triangular area FBE represents the firm's

Which of the following statements regarding pricing objectives is most accurate?

While pricing objectives frequently reflect corporate goals, pricing constraints often relate to