Question 1

Explain the price equation in the context of a new car purchase.

Accepted Answer

The answer of Explain the price equation in the context...

Question 2

Allowances, like discounts, refer to

Accepted Answer

Allowances are reductions from list or quoted prices to buyers for performing some activity, such as advertising, trade-ins, or promotional support. They are used to encourage buyers to purchase more or to promote a product or service. Therefore, the best option is E. The other options do not accurately describe allowances.

Question 3

Which of the following statements regarding a trade-in allowance is most accurate?

Accepted Answer

A trade-in allowance allows a buyer to exchange an old product as part of the payment for a new product. The old product is usually of lesser value than the new one, so the trade-in allowance acts as a discount on the price of the new product. This lowers the price a buyer has to pay without formally reducing the list price.

Question 4

A construction company was offered a 3 percent reduction in price off all invoices from a lumber yard for paying them within 10 days of issue. The lumber yard was offering a

Accepted Answer

The offer given by the lumber yard of 3 percent reduction in price off all invoices for paying within 10 days is a cash discount.

Question 5

A new car dealer can reduce the list price of a new Ford F-150 pickup truck by offering you a __________ of $1,000 for your 1998 Nissan Altima.

Accepted Answer

A trade-in allowance is a price reduction offered to a customer to trade-in their old vehicle towards the purchase of a new one. In this case, the dealer is offering $1,000 for the 1998 Nissan Altima, which can be used towards the purchase of the new Ford F-150 pickup truck.

Question 6

The acronym EDLP stands for __________.

Accepted Answer

EDLP stands for Everyday Low Pricing, which refers to a pricing strategy where the retailer sets low prices on products consistently instead of relying on frequent sales and discounts.

Question 7

Reductions from list or quoted prices to buyers for performing some activity are referred to as

Accepted Answer

Allowances refer to reductions from list or quoted prices given to buyers for performing some activity, such as trade-in allowances, promotional allowances, or volume allowances. Subsidies, on the other hand, are financial assistance given by the government or a nonprofit organization to support a particular industry, group, or individual. Remittances refer to the transfer of money from a payer to a payee, usually from one country to another, while noncumulative deductions and list price deductions are not commonly used to refer to buyer discounts or allowances.

Question 8

A promotional allowance refers to

Accepted Answer

A promotional allowance is a cash payment or extra amount of free goods awarded to sellers in the marketing channel for undertaking certain advertising or selling activities to promote the product.

Question 9

There are four common approaches to selecting an approximate price level. List and provide a brief description for each one.

Accepted Answer

The answer of There are four common approaches to selecting...

Question 10

Everyday low pricing refers to

Accepted Answer

The answer of Everyday low pricing refers to
...

Question 11

List four of the seven demand-oriented approaches to selecting an approximate price level and define what they are.

Accepted Answer

The answer of List four of the seven demand-oriented approaches...

Question 12

How do consumers use price in their assessments of value?

Accepted Answer

The answer of How do consumers use price in their...

Question 13

A single jar of original formula Carmex has different prices for the product depending upon where it is sold, but each price will end in a 9 ($0.99 at mass merchandisers like Walmart or Target; between $1.59 and $1.79 in drug and food retailers). This pricing strategy is called __________.

Accepted Answer

The pricing strategy described (having prices end in 9) is a classic example of odd-even pricing, where prices are set just below the whole number to make them appear lower and more appealing to consumers.

Question 14

Carmex uses all of the following approaches to setting the price of its products EXCEPT:

Accepted Answer

The statement says that Carmex uses all of the given approaches to set the price except for elasticity-oriented. Therefore, the correct answer is D.

Question 15

The practice of replacing promotional allowances with lower manufacturer list prices is referred to as

Accepted Answer

The practice of replacing promotional allowances with lower manufacturer list prices is known as everyday low pricing (EDLP). This strategy involves offering consistently low prices, eliminating the need for temporary price reductions or promotions. It provides customers with a sense of stability and reliability, and also reduces the cost of administering various discounts and promotions.

Question 16

A price reduction given when a used product is part of the payment on a new product is referred to as a __________.

Accepted Answer

A trade-in allowance is a reduction in price offered by a seller in exchange for a used product as part of the payment for a new product. This is a common practice in the automotive industry where buyers trade in their old car for a new one. The old car is then resold by the dealer or wholesaler. Cash discount is a reduction in price offered to a buyer who pays early or in cash. Seasonal discount is a reduction in price offered to stimulate demand during off-peak seasons. Promotional allowance is a payment or incentive given by a manufacturer or wholesaler to a retailer for promoting or selling its products. Subsidy discount is a reduction in price offered by a government or external organization to support a particular industry or product.

Question 17

Cash payments or an extra amount of free goods awarded sellers in the channel for undertaking certain advertising or selling activities to promote the product is referred to as a

Accepted Answer

The described activity is commonly known as a promotional allowance, which consists of a payment or free goods provided to intermediaries in exchange for promoting the product. Quantity discounts are based on the volume of purchases, not on promotion efforts. Seasonal discounts are temporary price reductions to sell seasonal or slow-moving products, not to encourage promotion. Purchase inducements and flexible pricing policies are not defined terms in this context.

Question 18

When Jeremy bought gas, he noticed the convenience store offered him a 2 percent reduction in price if he paid cash rather than if he used his credit card to pay for his purchase. The convenience store was offering him a

Accepted Answer

A cash discount is a reduction in price offered to a customer who pays with cash instead of credit. This is exactly what Jeremy was offered at the convenience store. A trade discount is a reduction in price offered to a reseller for buying in bulk or for being a preferred customer. A promotional allowance is a reimbursement from a manufacturer to a retailer for promoting their product. A rebate is a partial refund given to a customer after they have already paid the full price. A functional discount is a discount offered for paying early, or for making a recurring purchase. None of these other options match what Jeremy experienced.

Question 19

Larry's Lawn Care allows customers to use a credit card for purchases. Larry pays 4 percent of the sale to the credit card company. To promote more business, Larry decides to offer a lower price to customers paying cash - that price being 3 percent less than the standard list price. Larry is giving his customers a(n)

Accepted Answer

Larry is providing a cash discount to customers equal to the cost of credit, which is typically expressed as a percentage off the list price. The answer is D, cash discount.

Question 20

A trade-in allowance refers to

Accepted Answer

A trade-in allowance refers to a price reduction given when a used product is part of the payment on a new product.

Quiz 11: Pricing Products and Services