Question 1

Identify and describe three methods companies can use to attempt to measure their demand curves.

Accepted Answer

The answer of Identify and describe three methods companies can...

Question 2

In oligopolistic industries that sell a commodity,firms base their prices largely on competitors' prices.This is an example of ________.
A) EDLP
B) countertrade
C) price discrimination
D) going-rate pricing
E) high-low pricing

Accepted Answer

The pricing strategy described is called going-rate pricing, where firms set their prices based on the prevailing market price, usually that of their competitors. This is common in oligopolistic industries where there are only a few dominant players in the market selling a commodity product. The other options listed are not applicable in this scenario - EDLP (Everyday Low Pricing) is when retailers offer low prices consistently, countertrade is a practice of trading goods or services for other goods or services rather than using money, and price discrimination and high-low pricing both involve setting different prices for different customers or at different times.

Question 3

Following the industry average,your firm accepts a 20% markup on sales.If the unit cost of your product is $20.00,then the retail price would be ________.
A) $48.00
B) $40.00
C) $44.00
D) $22.00
E) $24.00

Accepted Answer

A 20% markup on a $20.00 cost means the retail price is $20.00 + (20% of $20.00) = $20.00 + $4.00 = $24.00.

Question 4

Baxter Healthcare,a leading medical products firm,was able to secure a contract for an information management system from Columbia/HCA,a leading health care provider,by guaranteeing the firm several million dollars in savings over an eight-year period.This is an example of ________.
A) market-skimming pricing
B) geographical pricing
C) auction-type pricing
D) going-rate pricing
E) gain-and-risk-sharing pricing

Accepted Answer

This scenario represents gain-and-risk-sharing pricing because Baxter Healthcare is guaranteeing Columbia/HCA several million dollars in savings over an eight-year period. This means that Baxter Healthcare is willing to share the risk with Columbia/HCA and is confident in its ability to deliver cost savings through the information management system.

Question 5

Explain the relationship between fixed costs,variable costs,total cost,and average cost.

Accepted Answer

The answer of Explain the relationship between fixed costs,variable costs,total...

Question 6

How would you explain the concept of "price elasticity" to a co-worker

Accepted Answer

The answer of How would you explain the concept of...

Question 7

Explain how Armani uses consumer psychology to charge at least 20 times more for a black T-shirt than do Gap or H&M.

Accepted Answer

The answer of Explain how Armani uses consumer psychology to...

Question 8

The formula for the break-even volume calculation is ________.
A) (price - variable costs)/fixed costs
B) fixed costs/(price - variable costs)
C) fixed costs/unit sales
D) fixed costs/(variable costs - price)
E) fixed costs X (variable costs - price)

Accepted Answer

The formula for the break-even volume calculation is fixed costs divided by the difference between the price and variable costs. This is because at the break-even point, total revenue equals total costs, or in other words, price multiplied by volume equals variable costs per unit multiplied by volume plus fixed costs. Solving for volume, we get the formula (price - variable costs)/fixed costs. Therefore, the correct choice is B, fixed costs/(price - variable costs).

Question 9

In exchange for the distribution of your products overseas,your firm has accepted to receive a shipment of imported products in trade.This is an example of what type of countertrade
A) Offset
B) Barter
C) Compensation deal
D) Buyback agreement
E) None of the above

Accepted Answer

This is an example of barter, which involves the direct exchange of goods or services without the use of money. In this case, the company is receiving a shipment of imported goods in exchange for distributing their own products overseas.

Question 10

Your company is considering employing a "freemium" strategy.Identify five guidelines for success using this strategy.

Accepted Answer

The answer of Your company is considering employing a "freemium"...

Question 11

The popularity of "early-bird" specials at restaurants is an example of what type of price discrimination
A) Time pricing
B) Channel pricing
C) Image pricing
D) Product-form pricing
E) Customer-segment pricing

Accepted Answer

The popularity of "early-bird" specials at restaurants is an example of time pricing, where the price of a good or service varies based on the time of day or week. This is a form of price discrimination because the restaurant is able to charge different prices to different customers based on when they choose to dine.

Question 12

Explain the difference between everyday low pricing (EDLP)and high-low pricing.

Accepted Answer

The answer of Explain the difference between everyday low pricing...

Question 13

Your company has invested $1,000,000 in plant and equipment and wants to ensure that it receives a 20% ROI on the pricing of its products.This 20% translates into $200,000.At a $16.00 cost and a 50,000 expected sales volume,at what price must your product "go out the door" to satisfy this ROI return
A) $24.00
B) $20.00
C) $40.00
D) $44.00
E) none of the above

Accepted Answer

The answer of Your company has invested $1,000,000 in plant...

Question 14

How can the Internet impact consumer price sensitivity

Accepted Answer

The answer of How can the Internet impact consumer price...

Question 15

Florida hotels discount the cost of their hotel rooms during the hot summer months.On the other hand,during the winter months,the price of these rooms increases.This is an example of what type of discount
A) Seasonal
B) Functional
C) Quantity
D) Promotional allowance
E) None of the above

Accepted Answer

This is an example of seasonal discount as the price is discounted based on the season (summer or winter). Functional discount is given to wholesalers or retailers for performing certain functions, quantity discount is given for purchasing in bulk quantities, and promotional allowance is given to advertise or promote a product. None of these discounts are applicable in this scenario.

Question 16

When the salesperson at the local luxury car dealer pitches a customer on the dealer's "free maintenance for 36 months or 36,000 miles whichever comes first," the salesperson is trying to overcome the car's initial high cost by using what method

Accepted Answer

The answer of When the salesperson at the local luxury...

Question 17

As a newly hired marketing associate,you have been given the responsibility to reduce the costs of your product by utilizing a process called "target costing." Explain how you would go about implementing a target costing program.

Accepted Answer

The answer of As a newly hired marketing associate,you have...

Question 18

If variable costs are $10 per unit,fixed costs are $300,000,and expected unit sales are 50,000,the unit cost is ________.
A) $16.00
B) $6.00
C) $20.00
D) $10.00
E) none of the above

Accepted Answer

The unit cost is calculated by adding variable cost per unit to the fixed cost per unit. Fixed cost per unit is $300,000/50,000 = $6.00. Adding the variable cost of $10.00 gives a total unit cost of $16.00.

Question 19

What is market skimming and where might you see market-skimming pricing practiced in consumer goods

Accepted Answer

The answer of What is market skimming and where might...

Question 20

At 1,000 calculators per day,Texas Instrument's factory is running at full capacity.This means that the cost of each calculator is now at its ________ cost.
A) total
B) average
C) lowest
D) highest
E) undetermined

Accepted Answer

When a factory is running at full capacity, it is able to produce goods at the lowest cost possible due to economies of scale. This means that the cost of each calculator is at its lowest cost. Therefore, choice C is the correct answer.

Quiz 14: Developing Pricing Strategies and Programs

Identify and describe three methods companies can use to attempt to measure their demand curves.

In oligopolistic industries that sell a commodity,firms base their prices largely on competitors' prices.This is an example of ________.

Following the industry average,your firm accepts a 20% markup on sales.If the unit cost of your product is $20.00,then the retail price would be ________.

Baxter Healthcare,a leading medical products firm,was able to secure a contract for an information management system from Columbia/HCA,a leading health care provider,by guaranteeing the firm several million dollars in savings over an eight-year period.This is an example of ________.

Explain the relationship between fixed costs,variable costs,total cost,and average cost.

How would you explain the concept of "price elasticity" to a co-worker

Explain how Armani uses consumer psychology to charge at least 20 times more for a black T-shirt than do Gap or H&M.

The formula for the break-even volume calculation is ________.

In exchange for the distribution of your products overseas,your firm has accepted to receive a shipment of imported products in trade.This is an example of what type of countertrade

Your company is considering employing a "freemium" strategy.Identify five guidelines for success using this strategy.

The popularity of "early-bird" specials at restaurants is an example of what type of price discrimination

Explain the difference between everyday low pricing (EDLP)and high-low pricing.

How can the Internet impact consumer price sensitivity

Florida hotels discount the cost of their hotel rooms during the hot summer months.On the other hand,during the winter months,the price of these rooms increases.This is an example of what type of discount

When the salesperson at the local luxury car dealer pitches a customer on the dealer's "free maintenance for 36 months or 36,000 miles whichever comes first," the salesperson is trying to overcome the car's initial high cost by using what method

As a newly hired marketing associate,you have been given the responsibility to reduce the costs of your product by utilizing a process called "target costing." Explain how you would go about implementing a target costing program.

If variable costs are $10 per unit,fixed costs are $300,000,and expected unit sales are 50,000,the unit cost is ________.

What is market skimming and where might you see market-skimming pricing practiced in consumer goods

At 1,000 calculators per day,Texas Instrument's factory is running at full capacity.This means that the cost of each calculator is now at its ________ cost.