Deck 13: Pricing Products and Services

Question 1

A company that manages apartments decides to buy 17 new dishwashers at a list price of $750 each as replacements for old dishwashers in a small apartment complex it owns.Because the company is buying more than 10 dishwashers,it is eligible for a $150 per unit quantity discount.Financing charges total $20 per unit.The company gets $10 per dishwasher for the 17 dishwashers traded in.What is the actual price the company will pay for each dishwasher?

A)$590
B)$600
C)$610
D)$730

Answer 1

C

Question 2

When Panera Bread opened Panera Cares Cafe,they implemented a pricing model that allowed consumers to pay what they wished for their items.This pricing model is referred to as:

A)self-sustaining
B)profit maximizing
C)profit minimizing
D)name your price

Answer 2

D

Question 3

Value-pricing is:

A)the ratio of perceived benefits to price.
B)the practice of simultaneously increasing product or service benefits and maintaining or decreasing price.
C)the practice of simultaneously increasing product and service benefits and increasing price.
D)the ratio of price to perceived benefits.

Answer 3

B

Question 4

Wilkinson Sword exchanged some of its knives for advertising used to promote its razor blades.This practice is referred to as:

A)commission.
B)price.
C)barter.
D)tariff.

Question 5

A new special on this week at your local dress shop is a 2 for 1 dress special with free tailoring.Last week,it was regular pricing on everything and tailoring was being charged $25.00 a dress.The marketers at this dress shop are engaging in:

A)revenue sharing
B)diminishing returns
C)quantitative analysis
D)value-pricing

Question 6

What were the first two questions that the bridge builders of the PEI Confederation Bridge wanted to know in order to accurately determine their pricing for using the bridge?

A)how many customers and how often
B)how many customers and how much they are willing to spend
C)how many day-to-day customers and how many tourists
D)how often and how much they are willing to spend

Question 7

While many daily users of the SCBL complain about the high costs,many tourists have no qualms about paying to use the bridge because of the:

A)experience in driving across.
B)currency conversion rate.
C)time compared to the ferry.
D)24/7 availability.

Question 8

When Panera Bread opened Panera Cares Cafes,they implemented a pricing model that allowed consumers to pay what they wished for their items.The goal of this cafe was to still be:

A)self-sustaining
B)profit maximizing
C)profit minimizing
D)a charity service

Question 9

From a marketing viewpoint,price is _____ exchanged for the ownership or use of a good or service.

A)money or other considerations (including goods but not intangibles and services)
B)money or other considerations (including other goods and services)
C)money exclusively earmarked for the transaction
D)what is recognized as barter within a particular culture

Question 10

There were a number of factors the management team for Strait Crossing Bridge Ltd.(SCBL)had to consider when determining what price to charge users of the Confederation Bridge.Some of the factors that they had to consider were: (1)what they offered to customers,(2)type of user,and (3)________________.

A)the weather
B)number of customers and the usage rate
C)the time of day
D)other toll bridges

Question 11

Which of the following is a special kind of price?

A)operating costs
B)liquidity
C)equitable medium
D)rent for an apartment

Question 12

The practice of exchanging goods and services for other goods and services rather than for money is called:

A)barter.
B)pricing substitution.
C)debt restructuring.
D)value-pricing.

Question 13

The price equation formula is price equals list price minus incentives and allowances plus:

A)salaries.
B)commissions.
C)trade-ins.
D)extra fees.

Question 14

When Radiohead launched their 'In Rainbows' album online,they allowed consumers to download it for free or download it for a donation the consumer set themselves.This type of pricing is referred to as:

A)self-sustaining
B)profit maximizing
C)profit minimizing
D)pay what you think it is worth

Question 15

Shell Oil recently exchanged one million pest-control devices for sugar from a Caribbean country.This practice is referred to as:

A)commission.
B)price.
C)barter.
D)tariff.

Question 16

After purchasing a bushel of 'C' grade apples for $10,which were on sale,you get home and realize that they are of excellent quality,and should have been graded 'B+' apples instead.You feel you received great benefits in comparison to the price you paid.This ratio is called:

A)the price-quality relationship.
B)prestige pricing.
C)value-added pricing.
D)value.

Question 17

Two individuals at a spice market in Marrakesh swap cinnamon in exchange for saffron,where both sides are equally happy with the arrangement.This occurred rather than exchanging:

A)value.
B)perceptions.
C)money.
D)promises.

Question 18

Patty O'Rourke hired an attorney to represent her in a court case involving an auto accident.The attorney charged O'Rourke a fee for his services.Terry Thomas needed a haircut-the local stylist charged him $12 for her services.Aaron Mathison mowed his neighbour's lawn; in exchange,the neighbour rototilled Mathison's garden.The attorney fees paid by O'Rourke,the $12 charged by the hair stylist,and exchange of lawn mowing for garden tilling are examples of:

A)price.
B)barter.
C)fee setting.
D)unfair market exchanges.

Question 19

Which of the following is a special kind of price?

A)operating costs
B)liquidity
C)equitable medium
D)college tuition

Question 20

When setting the toll charge for the Confederation Bridge,the pricing strategy included:

A)capital costs, operating costs, and long-range profits
B)the length of the bridge
C)length of the bridge and capital costs
D)time of day

Question 21

When Pizza Hut announced it was going to add 25 percent more toppings to its Lover's Line of pizzas without increasing the price,what consumer motivation was it appealing to?

A)cost
B)appearance
C)reliability
D)value

Question 22

According to your text,which of the following is NOT one of the steps included in the six-step process for setting price?

A)Set list or quoted price.
B)Estimate the break-even point.
C)Identify pricing constraints and objectives.
D)Select an approximate price level.

Question 23

TB Figure: 1
TB Figure 1 shows there are six distinct steps in the pricing process: identify pricing constraints and objectives; estimate demand and revenue; __________; select an approximate price level; set list or quoted price; and make special adjustments to list or quoted price.

A)estimate cost, volume, and profit relationships
B)scan competitors for price lines for similar products or services
C)select the appropriate pricing formula
D)establish the lowest and highest possible price range

Question 24

Most consumers realize the quality of diamonds varies,and most believe the higher the price of the diamond,the higher its quality.This is an example of price influencing the perception of overall quality,and _____ to consumers.

A)acceptable cost
B)perceptual investment
C)value
D)return on investment

Question 25

If you computed: (unit price x quantity sold)- total cost.What would you be calculating?

A)total revenue
B)profit
C)marginal revenue
D)average revenue

Question 26

TB Figure: 1
TB Figure 1 represents the six distinct steps in the pricing process.Cell "B" represents the step at which a firm would

A)estimate demand and revenue.
B)identify pricing objectives and constraints.
C)scan competitors for price lines for similar products or services.
D)select the appropriate pricing formula.

Question 27

Katherine was shopping for a new pair of sunglasses.While in The Bay department store in the shopping center,Katherine visited the optical department.Here she found a pair of Oakley brand sunglasses that she considered very attractive.However,the price of $225 was more than she expected to pay for sunglasses and asked the salesperson why the glasses carried such a high price tag.The salesperson informed Katherine that the $225 ensured her of the finest quality glasses featuring ultra-strong titanium frames and specially formulated lenses,which would protect Katherine from all harmful UV and blue light.Finally,the lenses would offer optimum optical clarity,and the glasses would "look great" on Katherine.The salesperson was attempting to help Katherine realize the value offered by the Oakley glasses by:

A)comparing the features of the glasses to those of other glasses.
B)comparing the ratio of perceived benefits to the price of the glasses.
C)creating a value analysis for Katherine.
D)creating a price/cost/benefit equation.

Question 28

TB Figure: 1
TB Figure 1 represents the six distinct steps in the pricing process.In which cell would a firm do price elasticity estimation?

A)A
B)B
C)C
D)D

Question 29

TB Figure: 1
TB Figure 1 represents the six distinct steps in the pricing process.In which cell would you be reviewing the following approaches: demand-oriented,cost-oriented,profit-oriented,and competition-oriented?

A)A
B)B
C)C
D)D

Question 30

GE made $50 billion in revenue in 2013 with total expenses of $35 billion,what was their total profit?

A)$85B
B)$50B
C)$15B
D)more information is needed

Question 31

A buying situation can involve comparing the costs and benefits of substitute items - such as real sugar to the sugar substitute Equal which,although more expensive than sugar,is purchased by many consumers because it contains no calories.This situation involves the consumer considering:

A)a marginal analysis.
B)a profit equation.
C)a break-even analysis.
D)a reference value.

Question 32

TB Figure: 1
TB Figure 1 represents the six distinct steps in the pricing process.Cell "F" represents the step at which a firm would

A)set list or quoted price.
B)select an approximate price level.
C)scan competitors for price lines for similar products or services.
D)make special adjustments to list or quoted price.

Question 33

TB Figure: 1
TB Figure 1 shows there are six distinct steps in the pricing process.Considering the following list of steps in setting price: estimate demand and revenue; estimate cost,volume,and profit relationships; select an approximate price level; set list or quoted price; and make special adjustments to list or quoted price.Which of the following steps is missing from this list?

A)raise initial capital
B)identify pricing constraints and objectives
C)scan competitors for price lines for similar products or services
D)select the appropriate pricing formula

Question 34

TB Figure: 1
TB Figure 1 represents the six distinct steps in the pricing process.Cell "C" represents the step at which a firm would

A)estimate demand and revenue.
B)identify pricing objectives and constraints.
C)scan competitors for price lines for similar products or services.
D)determine cost, volume, and profit relationships.

Question 35

A firm's profit equation demonstrates that its profit equals:

A)total cost + total revenue.
B)total revenue - total cost.
C)total cost - marginal cost.
D)total cost - variable cost.

Question 36

TB Figure: 1
TB Figure 1 represents the six distinct steps in the pricing process.Cell "A" represents the step at which a firm would

A)raise initial capital.
B)identify pricing objectives and constraints.
C)scan competitors for price lines for similar products or services.
D)select the appropriate pricing formula.

Question 37

TB Figure: 1
TB Figure 1 represents the six distinct steps in the pricing process.Deciding to offer 'freemium' pricing would occur in which cell?

A)B
B)C
C)D
D)E

Question 38

TB Figure: 1
TB Figure 1 represents the six distinct steps in the pricing process.Setting a list price of $199.99 for a new printer would be completed in which cell?

A)C
B)D
C)E
D)F

Question 39

Ships Ahoy is a small company that makes model sailboat kits priced at $120 each.(There is no quantity discount.)The costs of the materials that go into each kit are $45.It costs $5 in labour to assemble a kit.The company has monthly expenses of $1,000 for rent and insurance,$200 for heat and electricity,$500 for advertising in sailing and hobby magazines,and $3,500 for the monthly salary of its owner.If Ships Ahoy sells 150 kits in a given month,its monthly profit will be:

A)$5,300.
B)$10,500.
C)$12,700.
D)$12,800.

Question 40

Consumers will often make comparative value assessments.That is,the consumer will judge one product or service against other alternatives or substitutes.In doing so,a "_________" emerges,which involves comparing the prices and benefits of substitute items.

A)comparative value
B)reference value
C)differential value
D)assessed value

Question 41

TB Figure: 1
TB Figure 1 shows there are six distinct steps in the pricing process: identify pricing objectives and constraints; estimate demand and revenue; determine cost,volume,and profit relationships; __________; set list or quoted price; and make special adjustments to list or quoted price.

A)raise initial capital
B)scan competitors for price lines for similar products or services
C)select an approximate price level
D)select the appropriate pricing formula

Question 42

If competitive market circumstances are such that there is no price competition,no product differentiation,and the purpose of advertising is to increase demand for the product class,then _____ must exist in the industry.

A)a pure monopoly
B)an oligopoly
C)monopolistic competition
D)pure competition

Question 43

TB Figure: 1
TB Figure 1 shows there are six distinct steps in the pricing process: identify pricing objectives and constraints; estimate demand and revenue; determine cost,volume,and profit relationships; select an approximate price level; set list or quoted price; and __________.

A)test market the product or service to check for elasticity of demand
B)scan competitors for price lines for similar products or services
C)make special adjustments to list or quoted price
D)select the appropriate pricing formula

Question 44

Imagine you have some extra cash and would like to invest in something that will give you some extra money while you look for a job after graduation.If you invest $177 in a black-pawed Zip (a cat)Beanie Baby,you should remember that its price is most closely tied to:

A)supply and demand.
B)the price at the same time last year because of seasonal factors.
C)the price a decade ago because of long-term trend factors.
D)the relation of its changing price to gross domestic product.

Question 45

All of the following would be considered pricing constraints,except

A)demand for the product class
B)newness of the product
C)cost of producing the product
D)human resources

Question 46

An analysis of a prospective product shows it is expected to grow by at least 10 percent each year over the next 5 years,and then enter the maturity phase of its product life cycle.This type of analysis would provide useful information in which stage of the price-setting process?

A)identifying pricing constraints and objectives
B)determining cost, volume, and profit relationships
C)estimating demand and revenue
D)selecting an appropriate (approximate) price lining strategy

Question 47

Often,the earlier a product is in its life cycle:

A)the lower the price the firm must charge.
B)the more competition it has.
C)the greater the flexibility to charge a higher price.
D)the lower the production costs.

Question 48

Which term describes factors that affect price and include: newness of the product,whether it is part of a product line,and cost of changing a price?

A)price fixings
B)pricing constraints
C)price elasticities
D)pricing demands

Question 49

Florida Power & Light,an electric power company,is the only source of electricity for consumers in most parts of the Florida panhandle.As a(n)_____,the company receives approval from the state utility commission for the rates it can charge.

A)free enterprise
B)pure monopoly
C)oligopoly
D)monopolistic competitor

Question 50

Most government crown organizations in Canada operate in which competitive market?

A)Pure monopoly
B)Oligopoly
C)Monopolistic competition
D)Pure competition

Question 51

TB Figure: 1
TB Figure 1 shows there are six distinct steps in the pricing process: identify pricing constraints and objectives; estimate demand and revenue; estimate cost,volume,and profit relationships; select an appropriate price level; __________; and make special adjustments to list or quoted price.

A)set list or quoted price
B)test market the product or service to check for elasticity of demand
C)scan competitors for price lines for similar products or services
D)select the appropriate pricing formula

Question 52

If competitive market circumstances are such that there is some leader-follower price competition,some product differentiation,and the purpose of advertising is to inform,but avoid price competition,then _____ must exist in the industry.

A)a pure monopoly
B)an oligopoly
C)monopolistic competition
D)pure competition

Question 53

Each of the following is a true statement with respect to acting as a constraint on pricing EXCEPT:

A)We are dealing with a necessity type of good.
B)The product is in the maturity stage of its product life cycle.
C)The competitive environment is an oligopoly.
D)Only factors external to the organization are valid factors.

Question 54

The former Soviet republic Turkmenistan is in Central Asia and is one of the last countries on the planet to gain Internet access.The only Internet service provider for the entire country is Turkmen Telecom.There is no need for price competition,promotion competition,or product differentiation because Turkmen Telecom is a(n):

A)free enterprise.
B)pure monopoly.
C)oligopoly.
D)monopolistic competitor.

Question 55

Which pricing constraint is demonstrated by the following statement: "Most public utilities must petition regulatory commissions in order to obtain a rate increase"?

A)demand for the product, class, or brand
B)newness of product in the life cycle
C)costs of production
D)type of competitive markets

Question 56

When George and Arthurine Renfro decided to start a family business in 1990 and market chowchow,a southern regional food,they had to determine how they would price the chowchow by examining the demand for the product (would people rather eat home-made or store-bought),the cost of getting the jars for bottling the chowchow,and how much it would cost to distribute the product to area stores.In other words,the Renfros had to begin the development of their pricing strategy by:

A)identifying pricing constraints.
B)estimating break-even points and revenue points.
C)setting list price.
D)selecting an approximate price level.

Question 57

Pricing constraints are:

A)barriers that must be overcome in order to set pricing objectives.
B)competitive pricing advantages one firm has over another.
C)different pricing strategies for each of the firm's products.
D)factors that limit the latitude of prices a firm may set.

Question 58

The competitive market situation in which the few sellers are sensitive to one another's prices is called:

A)pure monopoly.
B)oligopoly.
C)monopolistic competition.
D)pure competition.

Question 59

Pharmacist and new father Kenneth Kramm wanted his son to take his medicine,but it was a battle.As a result Kramm developed FLAVORx,a liquid medicine-flavouring system that can mask the taste or smell of medicine.FLAVORx tastes of strawberry or grape and has no effect on the medicinal value of the drug to which it is added.It is the first product of its kind.Because Flavorx is in the _____ stage of the product life cycle,the price of the medicine-flavouring system should be _____ than the price that would usually be charged.

A)introductory; lower
B)growth; lower
C)introductory; higher
D)growth; higher

Question 60

The marketing director for a(n)_____ is most likely to believe,"The purpose of advertising is to increase demand for the product class."

A)pure monopoly
B)oligopoly
C)monopolistic competitor
D)pure competitor

Question 61

A car manufacturer launches a 2014 version of their newest vehicle and has internally stated that each car will have a profit margin of 25%.Manufacturing and marketing need to know this number so they can plan accordingly.The stated profit margin of 25% is an example of a(n):

A)a business mission.
B)pricing constraints.
C)pricing objectives.
D)a pricing plan.

Question 62

If competitive market circumstances are such that there is almost no price competition,no product differentiation,and the only advertising that informs prospects that the product is available,then ____ must exist in this industry.

A)a pure monopoly
B)an oligopoly
C)monopolistic competition
D)pure competition

Question 63

Figure: 13-3
Using Figure 13-3,how much price competition is most likely available for bushels of wheat?

A)There is a range of prices at which to sell.
B)The market sets the price so there is no price competition.
C)There is a price leader in the farming industry that sets the price.
D)Since there is only one seller, that firm sets the price.

Question 64

Buyers for grain set prices ahead of time by the marketplace.Sellers in this market are simply informed of the price and the amount that is needed.This market is likely one of a(n):

A)pure monopoly.
B)oligopoly.
C)monopolistic competition.
D)pure competition.

Question 65

Figure: 13-3
In Figure 13-3,column "C" represents which type of competitive market?

A)Pure monopoly
B)Oligopoly
C)Monopolistic competition
D)Pure competition

Question 66

If competitive market circumstances are such that there are a lot of sellers who use some price competition,some product differentiation,and the purpose of advertising is to differentiate the firm's products from competitors,then _____ must exist in the industry.

A)a pure monopoly
B)an oligopoly
C)monopolistic competition
D)pure competition

Question 67

Figure: 13-3
Using Figure 13-3,how much price competition is most likely available for video game makers?

A)There is almost none; the market sets the price.
B)There is some competition within a range of prices.
C)There is generally a price leader that sets the price.
D)Microsoft, Sony, and Nintendo are aware of each other's prices and may adjust their prices based on the prices of the other 2 firms.

Question 68

Which of the following is NOT one of the six major pricing objectives discussed in the text?

A)profit
B)unit volume
C)break-even
D)survival

Question 69

Figure: 13-3
In Figure 13-3,column "B" represents which type of competitive market?

A)Pure monopoly
B)Oligopoly
C)Monopolistic competition
D)Pure competition

Question 70

In which type of industry would a marketing director be most likely to say,"The purpose of our advertising is to differentiate our firm's products from our competitors' products"?

A)pure monopoly
B)oligopoly
C)monopolistic competition
D)pure competition

Question 71

The competitive situation of many national,regional,and private label brands of peanut butter is likely one of a(n):

A)pure monopoly.
B)oligopoly.
C)monopolistic competition.
D)pure competition.

Question 72

Which of the following statements about profit objectives is true?

A)Canadian firms have long been praised for their insistence on managing for long-run profits.
B)Profit objectives are frequently measured in terms of return on investment or return on assets.
C)Firms that are interested in strategic planning set their objectives to maximize current profit.
D)A target return pricing objective would only be used by a company that needs to attract more customers to survive.

Question 73

Figure: 13-3
Using Figure 13-3,how much price competition is most likely available for small coffee shops?

A)There is almost none; the market sets the price.
B)There is some competition within a range of prices.
C)There is generally a price leader that sets the price.
D)Starbucks sets the price and all other coffee shops follow its lea

Question 74

There are over 100 companies that manufacture natural and artificial flavourings used to enhance the taste of food before it is sold to consumers.Many of these manufacturers are regional operations.Many differentiate themselves from the competition by specializing in one or two types of foods for which they provide flavourings.Some use their distribution strategies as a means of differentiating themselves from their competition.This industry is most likely an example of:

A)pure monopoly.
B)oligopoly.
C)monopolistic competition.
D)bilateral monopoly.

Question 75

The marketplace sets the price for soybeans,so farmers who are trying to sell their soybean crops don't have to create a pricing strategy.The soybeans are sold in a(n)_____ market.

A)oligopoly
B)pure monopoly
C)pure competition
D)monopolistic competition

Question 76

Go to any Dominion supermarket and walk to the cereal aisle.You will notice four brands - Kellogg's,Quaker,General Mills,and Post-seem to occupy most of the shelf space.These cereals are all priced about the same.There is a good deal of product differentiation as the result of licensing agreements that have created a line of Disney cereals and through the use of different health claims.Given this information,you should know the cereal industry is an example of:

A)a pure monopoly.
B)an oligopoly.
C)monopolistic competition.
D)a pure competition.

Question 77

Figure: 13-3
In Figure 13-3,column "A" represents which type of competitive market?

A)Pure monopoly
B)Oligopoly
C)Monopolistic competition
D)Pure competition

Question 78

Which of the following types of competitive markets is LEAST likely to need pricing objectives?

A)oligopoly
B)pure monopoly
C)pure competition
D)monopolistic competition

Question 79

A manufacturing company that introduces a product must know or anticipate what specific price its _____ currently charge or will charge in the future.

A)information technology departments
B)subsidiary manufacturing divisions
C)previous industry relations
D)present and potential competitors

Question 80

Figure: 13-3
In Figure 13-3,column "D" represents which type of competitive market?

A)Pure monopoly
B)Oligopoly
C)Monopolistic competition
D)Pure competition