Question 1

Which of the following statements about geographical adjustments to price is most accurate?

Accepted Answer

Basing point pricing is used by industries where freight expenses make up a significant portion of the total cost to the buyer.

Question 2

When a firm divides its selling territory into geographic areas,it is referred to as

Accepted Answer

The answer of When a firm divides its selling territory...

Question 3

Five pricing practices are closely scrutinized because of potential unethical or illegal actions.They include: (1)price fixing; (2)price discrimination; (3)deceptive pricing; (4)predatory pricing;and (5)__________.

Accepted Answer

Geographical pricing is scrutinized because it can lead to unfair competition and discrimination against consumers based on their location.

Question 4

A company in Virginia that manufactures and sells peanut brittle to retailers charges higher shipping costs for orders sent to customers living west of the Mississippi River.This Virginia company is using

Accepted Answer

The company is charging higher shipping costs depending on the zone that the customer resides in, specifically the west of the Mississippi River. This indicates that the company is using multiple-zone pricing.

Question 5

According to the Geographical Pricing Map B above,if products are shipped from Denver,which of the following statements would be most accurate?

Accepted Answer

Customers in Dallas and Phoenix pay the same price because they are equidistant from Denver, resulting in similar shipping costs.

Question 6

After extensive analysis,a mail order company has decided to embark on a policy of multiple-zone pricing.In which step of the price-setting process would the mail order firm have made this decision?

Accepted Answer

The answer of After extensive analysis,a mail order company has...

Question 7

Five pricing practices are closely scrutinized because of potential unethical or illegal actions.They include: (1)price fixing; (2)price discrimination; (3)deceptive pricing; (4)geographical pricing;and (5)__________.

Accepted Answer

Predatory pricing is the fifth pricing practice that is closely scrutinized because it involves offering prices below the cost of production with the intention of driving out competition. This practice is considered unethical and is often illegal.

Question 8

Which of the following statements about geographical adjustments to price is most accurate?

Accepted Answer

In FOB with freight-allowed pricing, the buyer is allowed to subtract transportation costs from the list price, effectively reducing the cost they pay.

Question 9

Multiple-zone pricing refers to

Accepted Answer

Multiple-zone pricing refers to a firm's division of its selling territory into geographic areas or zones. This allows the firm to charge different prices in different zones based on factors such as competition, demand, and shipping costs.

Question 10

Suppose a firm selects its plant in St.Louis as the location from where it will ship its products to all of the identified cities shown in Geographical Pricing Map C above.The MSRP of the product is $100 but the firm adds a freight surcharge to cover transportation/freight.This surcharge will vary according to the distance between the origin of the shipment-in this case St.Louis-and the destination or customer's location.In this pricing method,what is St.Louis called?

Accepted Answer

In geographical pricing, a basing-point is the location chosen by the seller from which all the shipping costs will be calculated. In this scenario, St. Louis has been selected as the basing-point for the freight surcharge to cover transportation/freight costs. Therefore, the best choice is A) basing-point.

Question 11

Five pricing practices are closely scrutinized because of potential unethical or illegal actions.They include: (1)predatory pricing; (2)price discrimination; (3)deceptive pricing; (4)geographical pricing;and (5)__________.

Accepted Answer

The five pricing practices that are closely scrutinized for potential unethical or illegal actions are (1) predatory pricing, (2) price discrimination, (3) deceptive pricing, (4) geographical pricing, and (5) price fixing. Therefore, the best choice for the missing option would be price fixing (C), which is another pricing practice that can lead to anti-competitive behaviors and illegal actions. Lateral price fixing (B) is not commonly mentioned in discussions of pricing practices, and price discounting (A) and delayed payment penalties (D) are not typically viewed as unethical or illegal pricing practices. Additionally, price discrimination (E) is already listed as one of the options.

Question 12

According to the Geographical Pricing Map B above,if the plant in Denver ships its products to all the identified cities in the U.S.at different prices based on distance as indicated by the color-coded regions,it is most likely using which type of pricing?

Accepted Answer

The Geographical Pricing Map B shows different colored regions based on distance from Denver, indicating multiple-zone pricing. This means that prices will vary based on which zone the destination city falls into, rather than a single fixed price for all destinations or a price based on the specific destination. FOB zone pricing would also be a possibility, but there is no indication that the prices vary based on the plant's location rather than the destination. FOB destination pricing and basing-point pricing are not relevant to this scenario.

Question 13

A pricing strategy where the buyer is allowed to deduct freight expenses from the list price of the goods so the seller pays the transportation costs is referred to as

Accepted Answer

FOB with freight-allowed pricing is a strategy where the seller sets the price of goods, but also agrees to pay for transportation costs up to a certain amount. The buyer can then deduct the cost of transportation from the list price of the goods. This strategy is often used to attract customers and maintain a competitive advantage.

Question 14

Five pricing practices are closely scrutinized because of potential unethical or illegal actions.They include: (1)price fixing; (2)predatory pricing; (3)deceptive pricing; (4)geographical pricing;and (5)__________.

Accepted Answer

Price discrimination is closely scrutinized because it involves charging different prices to different customers for the same product or service, which can be considered discriminatory and unfair. It is also illegal in some cases, such as when it is based on a customer's race or gender.

Question 15

Another name for freight-absorption pricing is

Accepted Answer

The answer of Another name for freight-absorption pricing is
...

Question 16

Five pricing practices are closely scrutinized because of potential unethical or illegal actions.They include: (1)price fixing; (2)price discrimination; (3)predatory pricing; (4)geographical pricing;and (5)__________.

Accepted Answer

Deceptive pricing practices involve intentionally misleading customers through deceptive advertising or labeling of prices. This can include false reference prices, bait-and-switch tactics, and other forms of misrepresentation. It is closely scrutinized because it is considered unethical or illegal.

Question 17

Selecting one or more geographical locations from which the list price for products plus freight expenses are charged to the buyer is referred to as __________.

Accepted Answer

The answer of Selecting one or more geographical locations from...

Question 18

For which of the following products is its manufacturer most likely to use basing-point pricing?

Accepted Answer

Basing-point pricing is often used in heavy and bulky products that are expensive to ship, such as coal. By setting a base price at a central location (or basing-point) and adding freight charges from that point to the final delivery location, manufacturers can ensure that all customers pay a similar total price regardless of their distance from the production site.

Question 19

Suppose a firm selects its plant in St.Louis as the location from where it will ship its products to all of the identified cities shown in Geographical Pricing Map C above.The MSRP of the product is $100 but the firm adds a freight surcharge to cover transportation/freight.This surcharge will vary according to the distance between the origin of the shipment-in this case St.Louis-and the destination or customer's location.What is the most likely pricing method this firm is using?

Accepted Answer

Basing-point pricing involves setting a base location (in this case, St. Louis) and adding a freight surcharge based on the distance from this point to the customer's location.

Question 20

Basing-point pricing refers to

Accepted Answer

The answer of Basing-point pricing refers to
...

Quiz 14: Arriving at the Final Price

Which of the following statements about geographical adjustments to price is most accurate?

When a firm divides its selling territory into geographic areas,it is referred to as

Five pricing practices are closely scrutinized because of potential unethical or illegal actions.They include: (1) price fixing; (2) price discrimination; (3) deceptive pricing; (4) predatory pricing;and (5) __________.

A company in Virginia that manufactures and sells peanut brittle to retailers charges higher shipping costs for orders sent to customers living west of the Mississippi River.This Virginia company is using

According to the Geographical Pricing Map B above,if products are shipped from Denver,which of the following statements would be most accurate?

After extensive analysis,a mail order company has decided to embark on a policy of multiple-zone pricing.In which step of the price-setting process would the mail order firm have made this decision?

Five pricing practices are closely scrutinized because of potential unethical or illegal actions.They include: (1) price fixing; (2) price discrimination; (3) deceptive pricing; (4) geographical pricing;and (5) __________.

Which of the following statements about geographical adjustments to price is most accurate?

Multiple-zone pricing refers to

Five pricing practices are closely scrutinized because of potential unethical or illegal actions.They include: (1) predatory pricing; (2) price discrimination; (3) deceptive pricing; (4) geographical pricing;and (5) __________.

According to the Geographical Pricing Map B above,if the plant in Denver ships its products to all the identified cities in the U.S.at different prices based on distance as indicated by the color-coded regions,it is most likely using which type of pricing?

A pricing strategy where the buyer is allowed to deduct freight expenses from the list price of the goods so the seller pays the transportation costs is referred to as

Five pricing practices are closely scrutinized because of potential unethical or illegal actions.They include: (1) price fixing; (2) predatory pricing; (3) deceptive pricing; (4) geographical pricing;and (5) __________.

Another name for freight-absorption pricing is

Five pricing practices are closely scrutinized because of potential unethical or illegal actions.They include: (1) price fixing; (2) price discrimination; (3) predatory pricing; (4) geographical pricing;and (5) __________.

Selecting one or more geographical locations from which the list price for products plus freight expenses are charged to the buyer is referred to as __________.

For which of the following products is its manufacturer most likely to use basing-point pricing?

Basing-point pricing refers to