Question 1

Schemes in which salespersons are paid to recruit other salespeople, and each new salesperson pays for the right to recruit other salespeople, with some of that money going to earlier recruiters is called:
A)bid rigging.
B)bait-and-switch.
C)predatory pricing.
D)referral selling.
E)pyramid selling.

Accepted Answer

This scheme is commonly known as pyramid selling or multi-level marketing, where the emphasis is on recruiting new members rather than selling products. Each recruit pays for the right to recruit others, and the money flows up the pyramid to the earlier recruiters. This often leads to a never-ending chain of recruitment and very little actual product sales, resulting in unsustainable business models and potential legal scrutiny.

Question 2

A university publishes a journal, which is subscribed to by individuals and bookshops.The editors have recommended $20 as the retail price.The university also maintains that the journal cannot be sold at a discount.The university has threatened to cease the supply to any bookshop that sells for less than the recommended retail price.This is an example of:
A)price fixing.
B)price discrimination.
C)predatory pricing.
D)referral selling.
E)resale price maintenance.

Accepted Answer

The situation described is an example of resale price maintenance, which is a practice where a supplier sets a minimum price level for its product and threatens to cease supply to any distributor or retailer that does not comply with the set price level. In this case, the university is setting a retail price of $20 for its journal and threatening to stop selling to any bookshop that sells for less than that amount. This is an attempt to maintain the resale price of the journal across all distributors and ultimately increase profits for the university.

Question 3

Four companies dealing in dairy products admitted that they met to increase the price of their common products together.Which of the following exemplifies the activity of these companies?
A)Price fixing
B)Price discrimination
C)Predatory pricing
D)Referral selling
E)Resale price maintenance

Accepted Answer

The activity of four companies meeting together to increase the price of their common products is an example of price fixing, which is a violation of antitrust laws. Price discrimination refers to charging different prices to different customers for the same product, predatory pricing involves setting low prices to drive competitors out of the market, referral selling is a marketing technique that involves getting customers to refer other customers, and resale price maintenance is a practice where a manufacturer sets a minimum resale price for its products.

Question 4

A situation in which incentives are offered to consumers to provide the names of other potential consumers is called:
A)bid rigging.
B)bait-and-switch.
C)predatory pricing.
D)referral selling.
E)pyramid selling.

Accepted Answer

Referral selling is a situation in which incentives are offered to consumers to provide the names of other potential consumers. The consumer who provides the name of the potential customer is rewarded in some way, typically with a discount, free product, or other incentive. This practice is often used in direct sales and multi-level marketing.

Question 5

Kelly visited a computer store looking for a model listed at $600.The salesperson stated that this model was out of stock and tried to sell her another model priced at $1,352.This is an example of:
A)bid rigging.
B)bait-and-switch.
C)predatory pricing.
D)referral scheme.
E)pyramid sales.

Accepted Answer

The salesperson tried to lure Kelly into buying a more expensive product by misleading her with false information about the product she wanted being out of stock. This is a classic bait-and-switch tactic.

Question 6

A hotel management institute develops a training program for students.The fee for the training program is $1,000.The institute offers to share the training program with other colleges for a low price.One of the terms of the contract is that the other colleges should not offer the program to their students for less than $1,000.This is an example of:
A)price fixing.
B)price discrimination.
C)predatory pricing.
D)referral selling.
E)resale price maintenance.

Accepted Answer

This is an example of price fixing, where the institute is setting a minimum price for the program and prohibiting other colleges from offering it at a lower price. This practice is illegal under anti-trust laws as it restricts competition and harms consumers.

Question 7

A car sales showroom displays a basic car with a very low price tag.Once a customer is interested, the salesperson persuades him or her to buy a more expensive model.This is an example of:
A)bid rigging.
B)bait-and-switch.
C)predatory pricing.
D)referral selling.
E)pyramid selling.

Accepted Answer

This scenario is an example of bait-and-switch, where a customer is baited with a low-priced product but then switched to a more expensive model.

Question 8

The fee to enter a music event is set at $100 for men and $50 for women.This is an example of:
A)price fixing.
B)price discrimination.
C)predatory pricing.
D)referral selling.
E)resale price maintenance.

Accepted Answer

This is an example of price discrimination, as the price is set differently based on gender.

Question 9

A seller refusing to sell to other channel members unless that member agrees to buy solely from that particular seller is termed:
A)price fixing.
B)exclusive dealing.
C)predatory pricing.
D)misleading advertising.
E)refusal to deal.

Accepted Answer

This situation is an example of exclusive dealing, where a seller only sells to a buyer under the condition that the buyer agrees to purchase exclusively from that seller. This is often used to limit competition and is considered a form of vertical restraint.

Question 10

Which of the following is an impact of government regulations on marketers?
A)It drastically lessens the opportunity for marketers to sell more of their products.
B)It creates an uneven playing field for competition.
C)It contributes to the creation of legal irregularities in the market.
D)It increases the cost of compliance.
E)It promotes inflationary tendencies.

Accepted Answer

Government regulations often require businesses to comply with certain standards or rules, which can increase the cost of doing business. Marketers may need to invest in additional resources, such as staff or technology, to meet these requirements. This can lead to higher costs for the business and potentially higher prices for consumers.

Question 11

A driving school charges more to teach women drivers.Its justification is that, even though the lessons and methods are the same as used for men, they think they need to be more careful when women are driving.This is an example of:
A)price fixing.
B)price discrimination.
C)predatory pricing.
D)referral selling.
E)resale price maintenance.

Accepted Answer

This is an example of price discrimination where the driving school charges different prices for the same service based on the customer's gender. The justification given for the higher price is not based on any difference in the cost of providing the service but on a preference for being more careful when teaching women drivers. This is an unfair and discriminatory practice.

Question 12

A situation in which sellers collude to set prices in response to quotations for products is called:
A)bid rigging.
B)bait-and-switch.
C)predatory pricing.
D)referral selling.
E)pyramid selling.

Accepted Answer

Bid rigging is when sellers collude to set prices in response to quotations for products. They agree on the prices they will bid or the winner of the bid, thereby reducing competition and artificially inflating prices. This is illegal and anticompetitive behavior. Bait-and-switch refers to advertising a product at a low price to attract customers but then attempting to sell them a more expensive item. Predatory pricing is setting prices so low that competitors cannot compete and go out of business, and then raising prices once the competition is eliminated. Referral selling involves the use of referrals to sell products, often in a pyramid selling scheme where individuals are incentivized to bring in new sellers.

Question 13

A large software company released its web browser for free.As a result, other smaller software companies were forced to reduce their price significantly and went out of business.This is an example of:
A)bid rigging.
B)bait-and-switch.
C)predatory pricing.
D)referral selling.
E)pyramid selling.

Accepted Answer

The scenario described is an example of predatory pricing, which is the practice of setting prices low to drive competitors out of business and then raising prices once they have exited the market. The large software company's decision to release their web browser for free forced smaller companies to reduce their prices significantly, and ultimately resulted in their going out of business. This is a classic example of predatory pricing.

Question 14

The pricing that is intended to drive competitors out of the market or keep competitors from entering the market by fixing very low prices is called:
A)bid rigging.
B)bait-and-switch.
C)predatory pricing.
D)referral selling.
E)pyramid selling.

Accepted Answer

Predatory pricing is a pricing strategy used by businesses to drive out competitors or prevent new competition from entering the market by setting very low prices, sometimes below cost. This practice is illegal in some countries, including the United States, where it is subject to antitrust laws.

Question 15

Beck wanted to join a gym but was worried about the cost.The gym offered her a 100 percent rebate on a one-year membership if she gave the gym the names and telephone numbers of five of her friends.This is an example of:
A)bid rigging.
B)bait-and-switch.
C)predatory pricing.
D)referral selling.
E)pyramid selling.

Accepted Answer

This scenario is an example of referral selling, where a person is rewarded or offered an incentive for referring their friends or acquaintances to purchase a product or service. In this case, the gym is offering a 100 percent rebate on a one-year membership to Beck if she provides referrals.

Question 16

A country allows millions of extra barrels of oil into the market to push prices downward.This squeezes smaller oil producers out of the market and expand the country's own market share.This act could be termed:
A)price fixing.
B)price discrimination.
C)predatory pricing.
D)referral selling.
E)resale price maintenance.

Accepted Answer

This act is an example of predatory pricing, which occurs when a dominant firm intentionally sells products or services at a low price with the aim of driving smaller competitors out of the market. By flooding the market with cheap oil, the dominant country can drive down prices and make it difficult for smaller oil producers to compete, ultimately expanding its own market share.

Question 17

An automobile company published an advertisement that said that prices for the latest model on offer started at $10,000 with an interest rate of 10 percent.The ad showed the logo and picture of a new model.When an interested customer spoke with the authorized dealer mentioned in the ad, he was informed that the bargain price was only on the older model.This is an example of:
A)price fixing.
B)price discrimination.
C)predatory pricing.
D)misleading advertising.
E)resale price maintenance.

Accepted Answer

This is an example of misleading advertising, as the advertisement suggests a starting price for the latest model but in reality, the price is only applicable to the older model. This can mislead customers and is a violation of advertising laws.

Question 18

A company sells a mattress, which is claimed to promote good health.It also convinces customers to become part of a club where they receive commissions if they get other people to join the club or buy mattresses.This is an example of:
A)bid rigging.
B)bait-and-switch.
C)predatory pricing.
D)referral selling.
E)pyramid selling.

Accepted Answer

The description fits the practice of referral selling, where the company incentivizes customers to refer other people to join or purchase products in exchange for commissions or rewards. This is not necessarily illegal, as long as it is not a pyramid scheme, where the focus is solely on recruiting members rather than actual sales of products.

Question 19

Four companies quoted for and supplied paints to a massive housing reconstruction program.There were 200 contracts distributed over 10 years.Each company won 25 percent of the contract each year.This is an example of:
A)bid rigging.
B)bait-and-switch.
C)predatory pricing.
D)referral selling.
E)pyramid selling.

Accepted Answer

This scenario is an example of bid rigging, which is where multiple companies collude to manipulate the bidding process in order to ensure that each company wins a certain percentage of the contracts. In this case, each company wins 25% of the contracts each year, suggesting that they have divided the contracts amongst themselves rather than competing fairly for each individual contract.

Question 20

Which of the following situations arises during a recession?
A)An increase in the stock market valuations
B)An increase in the rate of unemployment
C)An increase in business and consumer confidence
D)An increase in consumer spending
E)An increase in purchasing power

Accepted Answer

During a recession, there is a decrease in economic activity, which often leads to an increase in unemployment rates.

Possible answer (if only one choice needs to be selected): B 
Possible answer (if multiple choices can be selected): B and C (if there were any uncertainty about an increase in business and consumer confidence, as it may or may not happen during a recession)

Quiz 3: Analyzing the Marketing Environment

Schemes in which salespersons are paid to recruit other salespeople, and each new salesperson pays for the right to recruit other salespeople, with some of that money going to earlier recruiters is called:

Four companies dealing in dairy products admitted that they met to increase the price of their common products together.Which of the following exemplifies the activity of these companies?

A situation in which incentives are offered to consumers to provide the names of other potential consumers is called:

Kelly visited a computer store looking for a model listed at $600.The salesperson stated that this model was out of stock and tried to sell her another model priced at $1,352.This is an example of:

A car sales showroom displays a basic car with a very low price tag.Once a customer is interested, the salesperson persuades him or her to buy a more expensive model.This is an example of:

The fee to enter a music event is set at $100 for men and $50 for women.This is an example of:

A seller refusing to sell to other channel members unless that member agrees to buy solely from that particular seller is termed:

Which of the following is an impact of government regulations on marketers?

A driving school charges more to teach women drivers.Its justification is that, even though the lessons and methods are the same as used for men, they think they need to be more careful when women are driving.This is an example of:

A situation in which sellers collude to set prices in response to quotations for products is called:

A large software company released its web browser for free.As a result, other smaller software companies were forced to reduce their price significantly and went out of business.This is an example of:

The pricing that is intended to drive competitors out of the market or keep competitors from entering the market by fixing very low prices is called:

Beck wanted to join a gym but was worried about the cost.The gym offered her a 100 percent rebate on a one-year membership if she gave the gym the names and telephone numbers of five of her friends.This is an example of:

A country allows millions of extra barrels of oil into the market to push prices downward.This squeezes smaller oil producers out of the market and expand the country's own market share.This act could be termed:

A company sells a mattress, which is claimed to promote good health.It also convinces customers to become part of a club where they receive commissions if they get other people to join the club or buy mattresses.This is an example of:

Four companies quoted for and supplied paints to a massive housing reconstruction program.There were 200 contracts distributed over 10 years.Each company won 25 percent of the contract each year.This is an example of:

Which of the following situations arises during a recession?