Question 1

How is unit cost calculated?

Accepted Answer

The answer of How is unit cost calculated?...

Question 2

Differentiate between target return pricing and market pricing.

Accepted Answer

The answer of Differentiate between target return pricing and market...

Question 3

Cloud 9,a US-based producer of chips and snacks,sells its products to a French supermarket chain.30% of the revenues it receives from the sales must be spent on products from France.This is an example of a(n)_____ countertrade agreement.

Accepted Answer

This is an example of an offset countertrade agreement, where a certain percentage of the revenue from sales must be reinvested in the country of the purchasing company. The other options are not relevant in this situation - barter involves exchanging goods or services for other goods or services, buyback involves the seller agreeing to buy back goods or products as part of the sale, and compensation involves one party compensating the other for losses or damages.

Question 4

What is price lining? Explain with the help of an example.

Accepted Answer

The answer of What is price lining? Explain with the...

Question 5

Which of the following best describes a trade-in allowance?

Accepted Answer

A trade-in allowance is a price reduction that is granted to customers when they turn in their old item while buying a new one. This is a common practice in the automobile industry, but can also apply to other products such as smartphones, computers, and appliances. The value of the trade-in allowance is usually based on the condition and age of the item being traded in.

Question 6

Explain the following terms: fixed costs (overhead),variable costs,and total costs.

Accepted Answer

The answer of Explain the following terms: fixed costs (overhead),variable...

Question 7

In what market conditions can a firm most appropriately adopt quality or service differentiation as a pricing object?

Accepted Answer

The answer of In what market conditions can a firm...

Question 8

A _____ gives a customer money off on a product,while a_____ reduces the product price through a money refund offer.

Accepted Answer

A rebate provides a discount by refunding a portion of the price after purchase. 
A premium offers free or discounted items as a bonus for purchasing a product. 
A coupon provides a discount when a customer purchases a product. Therefore, option B - coupon;rebate is the correct choice that reflects the difference between the two concepts.

Question 9

In the FOB pricing method:

Accepted Answer

In the FOB pricing method, the customer pays for all the freight charges, including the cost of shipping the product from the manufacturer to the destination. FOB stands for "Free On Board," which means that the manufacturer is responsible for the cost of loading the product onto the transportation vehicle, but the customer is responsible for the cost of transporting the product from the manufacturer's location to the final destination.

Question 10

Which of the following best describes a premium?

Accepted Answer

A premium refers to offering a product for free to encourage the purchase of another product. This is often seen in promotions like "buy one, get one free" or "get a free gift with purchase".

Question 11

In the uniform delivered pricing method:

Accepted Answer

In the uniform delivered pricing method, a standard freight charge is charged to all customers irrespective of location. The company includes the cost of shipping or delivery in the product price and thus bears the whole or a part of the freight charges.

Question 12

The expected value model is used to determine _____ prices where the price charged reflects the _____.

Accepted Answer

The answer of The expected value model is used to...

Question 13

When is differential pricing most likely to occur?

Accepted Answer

The answer of When is differential pricing most likely to...

Question 14

What would the price elasticity of demand for a product be if the seller raises the price by 3% and demand falls by 12%? Would this indicate price elasticity or inelasticity?

Accepted Answer

The answer of What would the price elasticity of demand...

Question 15

Many firms base their pricing decisions largely on what is necessary to recover their costs or match competitors.Discuss.

Accepted Answer

The answer of Many firms base their pricing decisions largely...

Question 16

Which of the following is true of freight absorption pricing?

Accepted Answer

Freight absorption pricing refers to a pricing strategy where the seller absorbs some or all of the freight charges instead of passing them on to the customer. Therefore, option A is the correct choice as it states that the seller picks up all or part of the freight charges. Option B is incorrect because it suggests the application of a standard freight charge to all customers, which is not related to freight absorption pricing. Option C is also incorrect as it indicates that the freight charge is calculated based on an average cost and not related to any strategy. Option D is incorrect as it contradicts the concept of freight absorption pricing, as the seller must absorb some or all of the freight charges.

Question 17

Gloria,a company dealing in toiletries,sells its Big Saver shaving kits at a price less than the total price of the items,if priced separately.This is an example of _____.

Accepted Answer

This is an example of product bundling, where the company is offering a bundle of items at a lower price than the total price of those items if sold separately.

Question 18

List the steps involved in the price setting process.

Accepted Answer

The answer of List the steps involved in the price...

Question 19

Compare the relative price levels associated with penetration pricing and maintaining a quality or service differentiation.

Accepted Answer

The answer of Compare the relative price levels associated with...

Question 20

Italian beverage company Flavors signs a contract to provide an Indian coffee company the latest coffee production equipment.The Indian company will pay Flavors both in cash as well as in the coffee it produces using the equipment.This is an example of a (n)_____ countertrade agreement.

Accepted Answer

This is an example of a buyback countertrade agreement, where the seller receives payment in both cash and products produced by the equipment sold.

Quiz 11: Pricing Decisions