Question 1

The Robinson-Patman Act does NOT include regulations that ________.

Accepted Answer

The Robinson-Patman Act focuses on preventing unfair competition among businesses by prohibiting price discrimination in sales to resellers, not directly protecting final consumers. Its main aim is to ensure fair competition by preventing large buyers from obtaining goods at lower prices than smaller buyers, rather than directly regulating the prices or terms offered to the final consumers.

Question 2

When consumers are unable to judge the quality of a product through examination or prior experience,they usually do which of the following and assume that the higher-priced product is the higher-quality product?

Accepted Answer

When consumers are unable to judge the quality of a product, they tend to make a price-quality inference, assuming that the higher-priced product is of higher quality. This is a common heuristic used in decision-making when there is a lack of information available.

Question 3

Some retailers advertise items at very low prices or even below cost just to get customers into the store.The rationale for implementing this ________ strategy is the belief that once a customer is in the store she will buy the advertised item as well as other items at regular prices.

Accepted Answer

This strategy is known as "loss leader pricing" where retailers offer one or more products at a price that is below cost to attract customers into the store with the hope that they will purchase other products at regular prices. This technique is often used to clear inventory or to promote new products.

Question 4

In some states,unfair trade practices acts ________.

Accepted Answer

Unfair trade practices acts in some states prohibit the selling of products below cost, which is also known as "predatory pricing."

Question 5

Sellers should know that the less elastic the demand for their product is,the more advantageous it is for them to ________.

Accepted Answer

If the demand for a product is less elastic, it means that consumers are less sensitive to changes in the price of the product. Therefore, sellers can raise the price without affecting the overall demand for their product, which will result in increased revenue and profits for the seller.

Question 6

Consumers usually perceive higher-priced products as ________.

Accepted Answer

Consumers tend to associate higher prices with higher quality. This is not to say that all high-priced products are necessarily of high quality, but perception plays a significant role in consumer behavior.

Question 7

Which of the following occurs when competitors making the same product jointly determine what price each will charge customers for the item?

Accepted Answer

Horizontal price fixing occurs when competitors in the same industry agree to jointly determine what price they will charge customers for their product, which is often illegal and violates antitrust laws.

Question 8

A(n)________ strategy is implemented when a store places two similar items next to each other,highlighting the fact that the price of one item is slightly lower than that of the other item.

Accepted Answer

The answer of A(n)________ strategy is implemented when a store...

Question 9

When Joe's Coffee Nook raised the price of a latte,Joe noticed a substantial change in how many lattes he sold daily.A price reduction caused his sales to increase.From this information,you can assume the demand for lattes is ________.

Accepted Answer

The fact that a price reduction caused an increase in sales indicates that the demand for lattes is elastic, meaning that changes in price have a significant impact on the quantity of lattes demanded.

Question 10

Many people rely on a prescription drug to control their cholesterol.An increase in the price of the drug would have little effect on the quantity demanded because there are no substitutes for the drug and because people who take it have no choice but to continue taking it if they wish to stay healthy.The demand for the cholesterol drug is ________.

Accepted Answer

The demand for the cholesterol drug is inelastic because there are no substitutes and people need to take it to maintain their health, so the price increase is unlikely to significantly decrease the quantity demanded.

Question 11

Which of the following is a pricing strategy that turns the typical assumption about price-demand relationships on its head?

Accepted Answer

The answer of Which of the following is a pricing...

Question 12

Enforcing laws against ________ is complicated because such practices are similar to the legal practice of "trading up."

Accepted Answer

Bait-and-switch tactics involve advertising a product or service at a low price to attract customers, but then trying to switch them to a more expensive item. This is similar to the legal practice of "trading up," where a salesperson will try to upsell a customer to a more expensive product. Enforcing laws against bait-and-switch tactics can be complicated because it is difficult to prove that the business did not intend to sell the advertised product and genuinely tried to persuade the customer to switch to a higher-priced item.

Question 13

When Home Depot stores entered the Canadian market,there were already stores providing similar services and products.To get people to try the Home Depot stores,the chain deliberately sold merchandise below the price that the Canadians were used to.What type of pricing objective did Home Depot use?

Accepted Answer

Home Depot used a competitive effect pricing objective by deliberately selling merchandise below the price that Canadians were used to in order to attract customers away from existing competitors.

Question 14

Which of the following occurs when manufacturers or wholesalers attempt to force retailers to charge a certain price for their products?

Accepted Answer

This is an example of vertical price fixing, where manufacturers or wholesalers try to control the retail prices of their products. This is illegal under the Sherman Antitrust Act as it violates fair competition.

Question 15

From a marketer's point of view,price lining is a way to do which of the following?

Accepted Answer

Price lining is a pricing strategy in which a business offers different products at different price ranges to maximize profits. It allows the business to appeal to customers with different budgets while also creating an image of quality and value. By offering multiple products at various price points, the business can attract customers who want the highest quality product and are willing to pay a premium price, as well as customers who are more budget-conscious and prefer lower-priced items. This helps the business increase sales and profits while also meeting the needs of different customer segments.

Question 16

By using ________,a company deliberately sets a low price with the intention of driving its competition out of business.

Accepted Answer

Predatory pricing is a strategy where a company sets an exceptionally low price in order to drive its competition out of business. The goal is to capture a large market share and take advantage of economies of scale to eventually increase prices once the competition is eliminated. It can be considered illegal in some countries as it is considered anti-competitive behavior.

Question 17

Federal legislation on price-fixing requires that sellers set their prices ________.

Accepted Answer

Federal legislation on price-fixing prohibits communication and agreements on prices between competing sellers. Setting prices based on costs, achieving a profit margin, or consistency with customers or regions are not relevant for preventing price-fixing.

Question 18

A business using price lining is doing which of the following?

Accepted Answer

Price lining involves selecting a few specific price points and then setting prices for products at those points. This allows businesses to simplify pricing decisions and communicate value to customers based on the perceived quality of the product. Therefore, the business is using price points to determine its pricing strategy.

Question 19

When setting prices,a leading manufacturer of nutritional supplements decided to institute a pricing strategy that would support a five percent increase in sales over the next three years.What type of pricing objective has the company set?

Accepted Answer

The company has set a sales objective.

Question 20

Price fixing occurs when two or more companies conspire to ________.

Accepted Answer

Price fixing occurs when two or more companies conspire to keep prices at a certain level, typically higher than they would be in a competitive market. This is illegal behavior and a violation of antitrust laws.

Quiz 11: Price the Product