Question 1

When you buy a Wilson Sting tennis racket from a discount store, you are offered the product at a single price. You can buy it or not, but there is no variation in price under the seller's:
A)one-price policy.
B)odd-even pricing.
C)penetration strategy.
D)bundle-pricing policy.

Accepted Answer

The seller's one-price policy means that there is no variation in price, and the price offered is the only option available. Therefore, the correct choice is A.

Question 2

Geographic adjustments are made by manufacturers or wholesalers to:
A)cover transportation costs.
B)cover promotional costs.
C)cover production costs.
D)cover administrative costs.

Accepted Answer

Geographic adjustments are made by manufacturers or wholesalers to cover transportation costs, such as shipping and handling fees, fuel costs, and other expenses associated with moving goods from one location to another. This helps ensure that the products remain priced competitively in different regions and markets, while still covering the cost of getting them there.

Question 3

A custom kitchen cabinet storeowner wishes to use target profit pricing to establish a price for a typical section of cabinets. Assume variable cost is $200 per unit, fixed cost is $44,000, and a target profit of $10,000 on a volume of 400 cabinets is desired. What should be charged for a typical cabinet section?
A)$335.00
B)$455.00
C)$398.00
D)$310.00

Accepted Answer

To achieve a target profit of $10,000 on 400 cabinets, the total revenue needed is the sum of total costs ($44,000 fixed costs + $200*400 variable costs) and the target profit, which equals $124,000. Dividing this by the volume (400 cabinets) gives a price of $310 per cabinet. However, to correct my initial calculation mistake, the correct approach is to add the fixed cost ($44,000), the total variable cost ($200*400 = $80,000), and the target profit ($10,000) to get a total of $134,000. Dividing this by the volume (400 cabinets) gives a price of $335 per cabinet.

Question 4

Many cruise lines pay the customers airfare to the point of cruise departure. What type of price adjustment are the cruise lines using?
A)promotional pricing
B)uniform delivered pricing
C)quantity discount pricing
D)skimming pricing

Accepted Answer

The answer of Many cruise lines pay the customers airfare...

Question 5

The practice of replacing promotional allowances with lower manufacturer list prices is called:
A)single-zone pricing.
B)everyday low pricing.
C)FOB origin pricing.
D)trade-in allowances.

Accepted Answer

The practice of replacing promotional allowances with lower manufacturer list prices is called everyday low pricing. This strategy aims to attract customers by offering lower prices consistently rather than temporary discounts or promotions.

Question 6

To reduce manufacturing costs, Carmex has started using environmentally friendly packaging. This packaging uses 20% less
A)glass.
B)plastic.
C)product.
D)paper.

Accepted Answer

The statement mentions that Carmex has started using packaging that is environmentally friendly and uses 20% less. Out of the options provided, plastic is the material most commonly used for packaging, and hence, reducing the use of plastic would result in a significant cost reduction. Therefore, option B is the best choice.

Question 7

Pharmaceutical companies that manufacture drugs for AIDS patients have been asked to provide free drugs to Africa where the disease is of epidemic proportions. So far, most of the companies have continued to charge for the medication. People who believe the pharmaceutical companies should provide free AIDS medication and recognize their obligation to act altruistically want the companies to have a__________ pricing objective.
A)social responsibility
B)target return
C)marginal profit
D)unit volume

Accepted Answer

A social responsibility pricing objective would align with the belief that pharmaceutical companies have an obligation to act in the interests of society and provide access to life-saving medication for those who cannot afford it, particularly in areas where the disease is of epidemic proportions. This pricing objective would prioritize the social impact and responsibility of the pharmaceutical companies over profits.

Question 8

Odd-even pricing is most closely related to:
A)customers' perceptions of price.
B)retailers' perceptions of price.
C)wholesalers' mark-ups.
D)manufacturers' costs.

Accepted Answer

Odd-even pricing is a pricing strategy that takes advantage of customers' perceptions of price. It involves setting prices at odd numbers (such as $9.99) rather than even numbers (such as $10.00) in order to make the price seem lower and more attractive to customers. This strategy is based on the idea that customers tend to focus on the left digit of the price, which can make a small difference in the actual price seem more significant in their minds.

Question 9

To promote their business, some psychics advertise free tarot card readings and other insights into their customers' futures on television. Unfortunately, this "free reading" has cost some unsuspecting callers as much as $700 in phone charges. This sort of deceptive pricing practice would be monitored by the:
A)Canadian Competition Bureau
B)Canadian Advertising Corporation.
C)Consumer Protection Agency.
D)CRTC.

Accepted Answer

The Canadian Competition Bureau is responsible for monitoring deceptive marketing practices, including misleading advertising and pricing practices in Canada.

Question 10

The Precision Writing Instruments Company makes two pen designs - the Cordova design and the Savannah design. These data apply, regardless of which of two pen designs is being implemented. Materials cost per pen is $6. Labour cost per pen is $5. Production overhead is $1,000,000. Advertising and promotion is $1,000,000. Marketing research has estimated the following demand functions for the next year of sales for the two pen designs where Q represents demand in thousands and P represents price. For the Cordova design, Q = 150 - 2.5P. For the Savannah design, Q = 175 - 2.1P. What are the total costs for sales of 500,000 units of the Cordova design?
A)$3,650,000
B)$7,500,000
C)$5,500,000
D)$2,000,000

Accepted Answer

The total cost includes materials and labor costs for 500,000 units, plus fixed production overhead and advertising costs. Total variable cost is (6+5) * 500,000 = $5,500,000. Adding fixed costs of $2,000,000 gives a total cost of $7,500,000.

Question 11

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)pay what you think it is worth
C)profit minimizing
D)profit maximizing

Accepted Answer

This type of pricing is known as "pay what you think it is worth" or "pay-what-you-want" pricing. It allows consumers to determine the value of the product and set the price accordingly. It can be a strategy to increase sales as well as customer satisfaction. It is not aimed at profit maximizing or profit minimizing, but rather is a way of engaging with customers by giving them greater control over the purchase.

Question 12

Brake-O is a franchise company that repairs brakes in cars and trucks. A radio ad for the company warned potential customers to "not fall prey to bait-and-switch schemes." The ad was telling potential customers to:
A)report services that violate the Competition Act.
B)be wary of brake repair services that are priced low because the services may try to sell customers a much higher priced service once the customer enters the store.
C)not do business at services that have arranged with a particular manufacturer that they will only buy from this manufacturer and from no other.
D)avoid doing businesses with services that have initiated a conspiracy among firms in its industry to set prices for a product or service.

Accepted Answer

The ad warns customers to be wary of low-priced brake repair services that may bait customers with low prices but switch to much higher-priced services once the customer enters the store. This is a common bait-and-switch scheme that some dishonest brake repair services try to pull off.

Question 13

The Hummer was an attention-getting SUV that sold for $80,000 in a limited number of outlets. Then, General Motors proved the smaller version for $50,000 could be sold in many more outlets. To cover costs and reach the market faster, the Hummer 2 shared some parts with other GM cars. To which customer effects did Hummer marketing managers need to pay particular attention?
A)The original Hummer is prestige priced; therefore, the price of Hummer 2 should make sense to customers and reflect differences in the perceived value of the products offered.
B)Comfort and space for families will be important for Hummer 2.
C)High gas mileage will be important for Hummer 2.
D)Colour choices will be important for Hummer 2.

Accepted Answer

The Hummer 2 is being sold at a lower price point and in more outlets, so it is important for the marketing managers to ensure that the price reflects the perceived value of the product. This is particularly important because the original Hummer was a prestige priced SUV. The other options (B, C, D) are not as relevant to the Hummer 2, as it is not being marketed as a family car, a fuel-efficient vehicle, or a car with a wide range of color choices.

Question 14

Factors that determine consumers' willingness and ability to pay for goods and services are called:
A)economic environmental factors.
B)elasticity factors.
C)demand factors.
D)the "misery index."

Accepted Answer

Demand factors include various factors that determine consumers' willingness and ability to pay for goods and services, such as their income, preferences, tastes, price of related goods or services, availability of substitutes, etc. Economic environmental factors refer to broader macroeconomic factors that impact the overall economy. Elasticity factors refer to the responsiveness of demand to changes in price, income, etc. The "misery index" is a measure of economic well-being that combines unemployment and inflation rates.

Question 15

The demand curve for which type of pricing method slopes downward and to the right, then turns back to the left?
A)skimming pricing
B)price lining
C)prestige pricing
D)penetration pricing

Accepted Answer

The demand curve for prestige pricing slopes downward and to the right as price increases, indicating that higher prices result in lower demand. However, at a certain point, the curve may turn back to the left as consumers equate higher prices with higher quality or exclusivity, resulting in increased demand at higher price points.

Question 16

At a price of $3 each, SHAPE magazine sells 1.25 million copies of its magazine targeted to young women seeking a healthier lifestyle. If the price is increased to $3.25 each, only 1 million copies will be sold. Fixed costs are $1 million and unit variable costs are $0.50 per magazine. For the information provided here, what is SHAPE magazine's total revenue obtained at the higher price?
A)$2,125,000
B)$1,625,000
C)$3,750,000
D)$3,250,000

Accepted Answer

First, let's calculate SHAPE magazine's revenue at the original price of $3:

Revenue = Price x Quantity = $3 x 1.25 million = $3,750,000

Next, let's calculate SHAPE magazine's revenue at the higher price of $3.25:

Revenue = Price x Quantity = $3.25 x 1 million = $3,250,000

Therefore, SHAPE magazine's total revenue obtained at the higher price is $3,250,000 (option D).

Question 17

You can buy a General Electric dishwasher for $399, or you can buy a similar sized under-the-counter Bosch brand dishwasher for $989. Since Bosch uses its pricing strategy to project a product image, it is most likely using__________ pricing.
A)bait and switch
B)penetration
C)standard markup
D)prestige

Accepted Answer

Bosch is using prestige pricing, which means setting a high price to signal high quality and exclusivity.

Question 18

There are a lot of skateboards on the market, but the BMW Streetcarver is the only one with stabilizers and wheel design based on BMW's automobile. This technology gives the BMW Streetcarver better control at high speeds and around sharp turns than any other brand. The skateboard is priced at $495, which leaves many consumers (especially young males)who might want to buy the Streetcarver unable to afford it. This inability to pay for the high-priced BMW-made skateboard shows the effects of ________ on sales.
A)demand factors
B)the consumer index
C)macroeconomic environmental factors
D)supply factors

Accepted Answer

The inability of consumers to afford the high price of the BMW Streetcarver shows the effects of demand factors on sales. Demand factors refer to the various factors that influence consumer demand, such as consumer preferences, income levels, and availability of substitutes. In this case, the high price of the BMW Streetcarver may deter potential buyers from purchasing the product, leading to decreased sales.

Question 19

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)reliability
B)appearance
C)value
D)cost

Accepted Answer

Pizza Hut is appealing to the consumer's desire for value by offering more toppings without increasing the price. This is a way to attract customers who want to get the most for their money and feel like they are getting a good deal.

Question 20

Carmex Original Formula Lip Products sell as low as $0.99 per jar to $1.79 per jar. The Moisture Plus Formula Lip Products sell between $2.49 and $2.99. Their Moisture Plus line, with its upscale silver tube, is intended to appeal to
A)men.
B)women.
C)youth.
D)first-time buyers.

Accepted Answer

The Moisture Plus line with its upscale silver tube is likely to appeal to women who may be looking for a more premium, refined lip balm product. The question does not provide any indication that the product is specifically designed to appeal to men, youth or first-time buyers, making B the best choice.

Quiz 13: Pricing Products and Services

When you buy a Wilson Sting tennis racket from a discount store, you are offered the product at a single price. You can buy it or not, but there is no variation in price under the seller's:

Geographic adjustments are made by manufacturers or wholesalers to:

Many cruise lines pay the customers airfare to the point of cruise departure. What type of price adjustment are the cruise lines using?

The practice of replacing promotional allowances with lower manufacturer list prices is called:

To reduce manufacturing costs, Carmex has started using environmentally friendly packaging. This packaging uses 20% less

Odd-even pricing is most closely related to:

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:

Brake-O is a franchise company that repairs brakes in cars and trucks. A radio ad for the company warned potential customers to "not fall prey to bait-and-switch schemes." The ad was telling potential customers to:

Factors that determine consumers' willingness and ability to pay for goods and services are called:

The demand curve for which type of pricing method slopes downward and to the right, then turns back to the left?

You can buy a General Electric dishwasher for $399, or you can buy a similar sized under-the-counter Bosch brand dishwasher for $989. Since Bosch uses its pricing strategy to project a product image, it is most likely using__________ pricing.

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?

Carmex Original Formula Lip Products sell as low as $0.99 per jar to $1.79 per jar. The Moisture Plus Formula Lip Products sell between $2.49 and $2.99. Their Moisture Plus line, with its upscale silver tube, is intended to appeal to