Question 1

A firm sells small-ticket items to their regular customers on customer charge accounts and then bills the customers each month.This type of credit arrangement is called:

Accepted Answer

The answer of A firm sells small-ticket items to their...

Question 2

A variation of geographic pricing in which the small company sells its merchandise to customers on the condition that they pay all the shipping is called:

Accepted Answer

The condition of paying for shipping is known as F.O.B. (Free on Board) factory pricing, also called F.O.B. origin pricing. This means that the buyer takes ownership and responsibility for the goods once they leave the factory, including the cost of shipping. This variation of geographic pricing is commonly used by small businesses to avoid the complexities of zone pricing or uniform delivered pricing.

Question 3

________ tells what portion of the total revenues remains after covering variable costs to contribute toward meeting fixed expenses and earning a profit.

Accepted Answer

The contribution percentage represents the portion of revenue that is left after covering variable costs, which can be used to meet fixed expenses and earn a profit. This percentage is crucial in determining the break-even point and making decisions regarding pricing and cost control. The full-absorption statement refers to a method of accounting for all costs, both fixed and variable. The break-even selling price and cost-plus pricing are methods used to determine the price of a product or service, but do not directly relate to the contribution percentage.

Question 4

Price ________ usually begin(s)when one competitor believes that they can achieve a higher volume through lower price,or they believe that they can exert enough pressure on other competitors' profits to drive them out of business.

Accepted Answer

Price wars occur when competitors engage in a battle of reducing prices in order to gain market share or force competitors out of business.

Question 5

A customer who purchases a television from Ace Appliance Store and pays for it in 36 monthly payments is using:

Accepted Answer

The customer is making payments over a period of time, indicating an installment credit purchase. Trade credit is when a business allows a customer to purchase goods and services and pay for them later, whereas charge account credit refers to a line of credit from a store that can be paid off at the end of each billing statement. Debit card credit is not a type of credit, but rather a payment method tied to a checking account.

Question 6

F.O.B.factory is a variation of ________ pricing.

Accepted Answer

F.O.B (Free On Board) factory refers to a geographic pricing strategy in which the price of the product includes only the cost of manufacturing and transporting it to the nearest port or distribution center. It is then the customer's responsibility to bear the additional costs of shipping, insurance, and other fees associated with transporting the product to its final destination.

Question 7

________ costing includes only those costs that vary directly with the volume of an item produced.

Accepted Answer

Direct costing, also known as variable costing, only includes direct costs such as direct materials and direct labor that vary directly with the volume of production. Indirect costs, such as overhead costs, are not included in direct costing. This method is often used for short-term decision making and determining the contribution margin of products.

Question 8

Customers that sell small-ticket items frequently offer their customers:

Accepted Answer

The answer of Customers that sell small-ticket items frequently offer...

Question 9

For some customers,a higher price equals:

Accepted Answer

Some customers perceive a higher price as an indication of higher quality, while others value uniqueness in a product that justifies a higher price. In both cases, the perceived value is greater, making D the best choice.

Question 10

When developing a marketing approach to pricing,business owners must:

Accepted Answer

Business owners should establish prices that are compatible with their customers' expectations and what they are willing to pay rather than just competing solely on price. This approach takes into account the value proposition of the product or service and considers the customer's perceived value. It may also involve researching the prices of competitors and adjusting prices accordingly while keeping in mind the target market's preferences and budget.

Question 11

Even in the short run,a small business must set the price of a product at least equal to the ________ costs (per unit),or it must shut down.

Accepted Answer

The variable costs are the costs that vary with the level of production, such as raw materials, labor, and utilities. These costs must be covered by the price of the product in order for the business to remain profitable in the short run. Fixed costs, on the other hand, are the costs that do not vary with the level of production, such as rent and salaries, and although they are important for the long-term survival of the business, they do not determine the minimum price for a product in the short run. Total costs are the sum of fixed and variable costs, and invariable costs do not exist in economics.

Question 12

To establish a reasonable,profitable price for service,the small business owner needs to know:

Accepted Answer

The answer of To establish a reasonable,profitable price for service,the...

Question 13

Uniform delivered pricing is a variation of:

Accepted Answer

Uniform delivered pricing is a type of geographic pricing where the price of the product is the same for all customers regardless of their location, and the seller includes the cost of shipping or delivery in the product price.

Question 14

In most cases,a ________ pricing strategy is used to introduce relatively low priced goods into the market where no elite segment and little opportunity for differentiation exist.

Accepted Answer

Penetration pricing is the most appropriate pricing strategy to introduce relatively low priced goods into the market where no elite segment and little opportunity for differentiation exist. This strategy is used to attract a large number of customers and gain market share quickly by offering the product at a lower price than the competitors. The objective of this strategy is to stimulate demand, penetrate the market and gain a foothold by offering a low-priced product.

Question 15

Price wars usually begin when:

Accepted Answer

Price wars usually start when a competitor in the market believes that they can sell more products by reducing the price. This can lead to other competitors reducing their prices to remain competitive, eventually leading to a price war.

Question 16

Most service firms base their prices on:

Accepted Answer

The answer of Most service firms base their prices on:
...

Question 17

The price that business owners set depends on the desired image they want to create for their products or services.These images are:

Accepted Answer

The best choice is D (All of the above) because business owners can choose to set prices based on a discount image to attract price-sensitive customers, a value image to appeal to those looking for a balance of quality and affordability, or an upscale image to target customers looking for luxury or exclusivity. Ultimately, the price set should align with the desired brand image and target audience.

Question 18

Which price strategy is mostly used for moving stale,outdated,damaged merchandise?

Accepted Answer

Markdown pricing is the most appropriate price strategy for moving stale, outdated, or damaged products. It involves reducing the original price of the product to a point where it becomes attractive to customers and helps to clear inventory quickly. This pricing strategy is commonly used to sell products that are nearing their expiration date or have minor defects.

Question 19

Brenda is starting her business by offering exclusive hand-bags.The desired image that she should set for her handbags is "exclusive." She should set the price at:

Accepted Answer

To maintain an image of exclusivity, Brenda should set her prices to be upscale, indicating a high level of quality and exclusivity. Discount and bargain prices would suggest lower quality or less exclusivity, while a value-priced product may not evoke the desired exclusivity.

Question 20

XYZ manufactures computer hardware.The marketing executives,in order to increase the market share,forced a business to accept a suggested retail price and not to sell the items below the stated price.

Accepted Answer

The answer of XYZ manufactures computer hardware.The marketing executives,in order...

Quiz 11: Pricing and Credit Strategies