Question 1

The formula, Total revenue - Total cost or [(Unit price × Quantity sold) - (Fixed cost + Variable cost)] represents __________.

Accepted Answer

The formula Total revenue - Total cost or [(Unit price × Quantity sold) - (Fixed cost + Variable cost)] represents the profit equation. It calculates the profit earned by deducting the total cost from the total revenue.

Question 2

A firm's profit equation demonstrates that profit equals __________.

Accepted Answer

Profit is equal to total revenue minus total cost.

Question 3

The ratio of perceived benefits to price is referred to as

Accepted Answer

The answer of The ratio of perceived benefits to price...

Question 4

Which of the following statements is most accurate?

Accepted Answer

Research has shown that for some products, consumers use price as a cue to judge the quality of the product, and therefore its overall value. This is particularly true for products where quality is difficult to assess directly, such as wine or jewelry. However, it is not universally true for all products, and some consumers may prioritize other factors such as convenience or brand loyalty over price and quality.

Question 5

To increase value, marketers may __________, decrease price, or do both.

Accepted Answer

To increase the value of a product, marketers can either increase the benefits offered by the product, which justifies a higher price, or they can increase the price while keeping benefits the same, making the product seem more prestigious or high-end. Decreasing benefits (A) or doing nothing (E) may decrease perceived value, and increasing advertising (D) alone will not necessarily increase value.

Question 6

A company that manages apartments decides to buy 15 new dishwashers at a list price of $550 each as replacements for a small apartment complex it owns. Because the company is buying more than 10 dishwashers, it is eligible for a $150-per-unit quantity discount. Financing charges total $20 per unit. The company gets $10 per dishwasher for 15 used trade-ins. What is the final price the company will pay for EACH dishwasher?

Accepted Answer

The price before the quantity discount is:

15 dishwashers × $550/dishwasher = $8,250

The quantity discount reduces the price by $150 per unit:

15 dishwashers × $150/dishwasher = $2,250

So the price after the quantity discount is:

$8,250 – $2,250 = $6,000

Adding the financing charges:

15 dishwashers × $20/dishwasher = $300

Therefore, the price before the trade-in allowance is:

$6,000 + $300 = $6,300

Subtracting the trade-in allowance:

15 dishwashers × $10/dishwasher = $150

The final price is:

$6,300 – $150 = $6,150

Dividing this price by the number of dishwashers, we get the price per dishwasher:

$6,150 / 15 = $410

Therefore, the final price the company will pay for EACH dishwasher is $410.

Question 7

Tara is enrolled for spring semester at college. The tuition is $6,000, but she has a scholarship for $1,000 as well as a work-study grant of $1,500. The health fees and student activity fees are $150 for the semester. What is the final price that Tara will pay for the spring semester?

Accepted Answer

The answer of Tara is enrolled for spring semester at...

Question 8

Suppose you want to buy an all-electric Tesla Model S, the world's leading all-electric, zero-emission car that has a 265-mile range and can be recharged in three hours. The Tesla Model S Performance model has a list price of $87,500. However, you want several options (Performance Plus Package, red multi-coat armor paint, Tech package, Sound Studio Package, home charging station, performance wheels, and others) that will cost $17,500. An extended warranty will add an additional $5,000. However, if you put $50,000 down now and finance the balance over the next year, you will receive a dealer rebate of $5,000 off the list price. The dealer will give you a $7,000 trade-in allowance for your 2008 Honda Civic DX four-door sedan. In addition, you will have to pay a state sales tax of $10,000, an auto registration fee of $1,000 to the state, and a $1,000 destination charge to ship and prep the car. But because the Tesla Model S is an alternative energy vehicle, you qualify for a $2,500 state rebate and a $7,500 federal tax credit! Finally, your total finance charge is $7,000. Applying the price equation, what is your final price for the Tesla Model S?

Accepted Answer

The answer of Suppose you want to buy an all-electric...

Question 9

Calculate a firm's total revenue (TR) using the following information: the unit price (P) for a product is $40; the quantity sold (Q) is 2,000; the fixed cost (FC) is $50,000; and the variable cost (VC) is $20,000.

Accepted Answer

The answer of Calculate a firm's total revenue (TR) using...

Question 10

Most consumers realize that the quality of diamonds varies, and most believe the higher the price of a diamond, the higher its quality. This is an example of price influencing the perception of overall quality, and therefore __________ to consumers.

Accepted Answer

The sentence mentions that consumers believe the higher the price of a diamond, the higher its quality. This shows that consumers perceive value in a diamond based on its price. Therefore, the most fitting option to complete the sentence is "value".

Question 11

A reference value involves comparing the costs and benefits of __________.

Accepted Answer

The answer of A reference value involves comparing the costs...

Question 12

According to the price equation, a product's or service's final price equals its list price minus incentives and allowances plus

Accepted Answer

Key term definition-price equation.

Question 13

If you wanted to buy a McDonald's Big Mac, small fries, and a small drink separately, it will you cost you $6.19. However, if you purchased these three items together as part of the firm's Extra Value Meal package, you would pay only $4.39, savings 80 cents. This "Extra Value Meal" price serves as __________ to you and other consumers, who compare the costs and benefits of substitute items to a bundle containing those items.

Accepted Answer

The "Extra Value Meal" price serves as a reference value for consumers to compare the costs and benefits of substitute items to a bundle containing those items. This is because the price of the bundle creates a perception of value and savings, which attracts consumers to purchase it instead of buying the items separately. Therefore, this reference value can influence consumer behavior and purchasing decisions.

Question 14

The ratio of perceived benefits to __________ is referred to as value.

Accepted Answer

The answer of The ratio of perceived benefits to __________...

Question 15

A firm's profit equation equals

Accepted Answer

The profit equation is Total revenue - Total cost or [(Unit price × Quantity sold) - (Fixed cost + Variable cost)]. This is the most common and widely accepted equation for calculating profit. It takes into account the revenue generated from sales and subtracts the total cost incurred in producing those sales.

Question 16

In the purchase of the sugar substitute Splenda, you may compare it to something you know about like real sugar. Although Splenda is more expensive than sugar, is purchased by many consumers because it contains no calories. This situation involves the consumer considering

Accepted Answer

Consumers compare Splenda to real sugar, using sugar as a reference value to evaluate Splenda's benefits, such as being calorie-free, despite its higher price.

Question 17

The ratio of __________ to price is referred to as value.

Accepted Answer

The answer of The ratio of __________ to price is...

Question 18

A reference value __________.

Accepted Answer

The answer of A reference value __________.
...

Question 19

The __________ equation = (Unit price × Quantity sold) - Total cost.

Accepted Answer

The equation given is the formula for calculating profit.

Question 20

To increase value the most, marketers should

Accepted Answer

To increase value the most, marketers should decrease price and increase benefits. This will result in a higher perceived value for the customer, making the product or service more attractive and competitive in the market. By decreasing the price, the product becomes more affordable and accessible to a broader range of customers, while increasing benefits ensure that the customers receive the maximum value for their investment. As a result, this combination helps in building customer loyalty, driving sales and revenue growth for the business.

Quiz 11: Pricing Products and Services

The formula, Total revenue - Total cost or [(Unit price × Quantity sold) - (Fixed cost + Variable cost) ] represents __________.