Question 1

Figure 13-2 above represents the six steps in setting price."C" represents the step at which a firm would
A)estimate demand and revenue.
B)identify pricing objectives and constraints.
C)scan competitors for prices of similar products or services.
D)determine cost,volume,and profit relationships.
E)establish the price range.

Accepted Answer

The answer of Figure 13-2 above represents the six steps...

Question 2

Figure 13-2 above represents the six steps in setting price."F" represents the step at which a firm would
A)set list or quoted price.
B)select an approximate price level.
C)scan competitors for prices of similar products or services
D)make special adjustments to list or quoted price.
E)establish the price range.

Accepted Answer

In the context of setting prices, making special adjustments to the list or quoted price typically occurs after the initial price has been set, which aligns with step "F" in the process.

Question 3

A buying situation can involve comparing the costs and benefits of substitute items-such as real sugar to the sugar substitute Splenda,which,although more expensive than sugar,is purchased by many consumers because it contains no calories.This situation involves the consumer considering
A)a marginal analysis.
B)a profit equation.
C)a break-even analysis.
D)price elasticity of demand.
E)a reference value.

Accepted Answer

The answer of A buying situation can involve comparing the...

Question 4

A BOGO offer is retail slang that means
A)big orders,greater overhead
B)buy one,get one
C)build only good offerings
D)bad once,good overall
E)buy over grand objectives

Accepted Answer

BOGO offer stands for Buy One, Get One. It is a marketing term widely used in retail and e-commerce industries. Customers are offered the opportunity to receive a free item if they purchase another item at full or discounted price.

Question 5

A firm's profit equation demonstrates that profit equals __________.
A)Total cost + Total revenue
B)Total revenue − Total cost
C)Marginal revenue − Marginal cost
D)Price × Quantity
E)Total revenue + Marginal cost

Accepted Answer

Profit is the difference between total revenue and total cost. So, the equation for profit is Total revenue – Total cost.

Question 6

The American Eagle Outfitters in-store signage photo above shows that customers can buy an American Eagle Outfitters hoodie for $24.95 and then purchase another one for 50 percent off (BOGO Deal "A").Another BOGO deal (not shown above)offers consumers a markdown of 10 percent if they buy two hoodies (BOGO Deal "B").In a third BOGO deal (not shown above),a retailer has marked down the price of hoodies from $24.95 to $22.95 per hoodie,so you'll consider buying two at that price (BOGO Deal "C").BOGO deal #4 (not shown above)offers consumers the following terms: 5 percent off the first item and then 10 percent off the reduced price for the second item (BOGO Deal "D").Finally,a fifth BOGO deal offers consumers the following terms: $10 off of all purchases of $40 or more (BOGO Deal "E").Which BOGO deal offers the best value (least cost)to consumers for the purchase of American Eagle Outfitters hoodies?
A)BOGO Deal "A"
B)BOGO Deal "B"
C)BOGO Deal "C"
D)BOGO Deal "D"
E)BOGO Deal "E"

Accepted Answer

BOGO Deal "A" offers the best value because the first hoodie is $24.95, and the second is 50% off, making it $12.475. The total cost for two hoodies is $37.425, which is less than the other deals.

Question 7

A reference value involves comparing the costs and benefits of __________.
A)substitute items
B)items of equal or greater value
C)products with which a consumer is familiar and items the consumer has not seen or used before
D)items from one particular distributor
E)intangible items

Accepted Answer

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

Question 8

Figure 13-2 above represents the six steps in setting price.Which letter represents the step where a firm would estimate price elasticity?
A)"A"
B)"B"
C)"C"
D)"D"
E)"E"

Accepted Answer

Step B, or determining demand, is where a firm would estimate price elasticity. This involves analyzing how price changes affect the quantity of goods demanded by consumers, which helps the firm understand how sensitive its target market is to price changes.

Question 9

Figure 13-2 above represents the six steps in the price-setting process."A" represents the step at which a firm would
A)raise initial capital.
B)identify pricing objectives and constraints.
C)scan competitors for prices of similar products or services.
D)select the appropriate pricing formula.
E)establish the price range.

Accepted Answer

Step "B" represents the identification of pricing objectives and constraints, which is an important step in the price-setting process. The other steps are represented by different letters, such as competitors scanning at step "C," price range establishment at step "E," and so on.

Question 10

The __________ equation = (Unit price × Quantity sold)− Total cost.
A)total revenue
B)variable cost
C)net present value
D)profit
E)break-even point

Accepted Answer

The given equation represents the calculation of profit.

Question 11

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.
A)$10,000
B)$50,000
C)$110,000
D)$150,000
E)cannot be determined with the information provided

Accepted Answer

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

Question 12

As shown in the McDonald's menu board photo above,McDonald's is most likely using which type of pricing strategy?
A)predatory pricing
B)value pricing
C)loss-leader pricing
D)odd-even pricing
E)barter

Accepted Answer

McDonald's is most likely using value pricing because it highlights the low prices of their items, such as the $1 $2 $3 Dollar Menu option.

Question 13

The formula,Total revenue − Total cost or [(Unit price × Quantity sold)− (Fixed cost + Variable cost)] represents __________.
A)the value equation
B)the sales ratio
C)average revenue
D)the break-even point
E)the profit equation

Accepted Answer

The formula Total revenue − Total cost or [(Unit price × Quantity sold)− (Fixed cost + Variable cost)] represents the profit equation, which calculates the amount of profit made by subtracting the total costs from the total revenue.

Question 14

A firm's profit equation equals
A)Total cost + Total revenue or [(Fixed cost + Variable cost)+ (Unit price × Quantity sold)].
B)Total revenue − Total cost or [(Unit price × Quantity sold)− (Fixed cost + Variable cost)].
C)Total cost − Marginal cost or [(Fixed cost + Variable cost)− (Unit price × Quantity sold)].
D)Total cost − Variable cost or [(Fixed cost + Variable cost)− (Unit price × Quantity sold)].
E)Total revenue / Total cost or [(Unit price × Quantity sold)÷ (Fixed cost + Variable cost)].

Accepted Answer

The profit equation is Total revenue − Total cost or [(Unit price × Quantity sold)− (Fixed cost + Variable cost)]. This is because profit is the remaining amount after deducting all costs (fixed and variable) from the revenue earned. Therefore, option B is the best choice for the profit equation.

Question 15

A reference value __________.
A)is relative to the amount of time and energy a consumer puts into the purchase process
B)is based upon the value assigned to similar items used by the consumer's peers
C)results from performing a careful break-even analysis
D)involves comparing the costs and benefits of substitute items
E)is based upon the differential between customers' "needs" and "wants"

Accepted Answer

The answer of A reference value __________.
A)is relative to the...

Question 16

Figure 13-2 above represents the six steps in setting price."E" represents the step at which a firm would
A)set list or quoted price.
B)select an approximate price level.
C)scan competitors for prices of similar products or services.
D)determine cost,volume,and profit relationships.
E)establish the price range.

Accepted Answer

The correct answer is A because "set list or quoted price" is the fifth step in setting price, which is represented by "E" in Figure 13-2.

Question 17

The Gap in-store signage photo above shows that customers can save 60 percent off a second item if they purchase one at the full price.This is an example of a __________ deal to entice shoppers to buy additional items.
A)Big Clearance
B)Extra Value
C)BOGO
D)Inventory Reduction Sale
E)Barter

Accepted Answer

This is an example of a BOGO (Buy One, Get One) deal, where customers are encouraged to buy one item at full price to receive a discount on a second item.

Question 18

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¢.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.
A)a marginal analysis
B)a profit equation
C)a reference value
D)a break-even analysis
E)price elasticity of demand

Accepted Answer

The Extra Value Meal price serves as a reference value to consumers who are comparing the costs and benefits of similar items. It provides a benchmark for consumers to evaluate whether the bundle is worth purchasing compared to buying the items separately. Therefore, the best choice is option C, a reference value.

Question 19

Figure 13-2 above represents the six steps in setting price."B" represents the step at which a firm would
A)estimate demand and revenue.
B)identify pricing objectives and constraints.
C)scan competitors for prices of similar products or services.
D)select the appropriate pricing formula.
E)determine cost,volume,and profit relationships.

Accepted Answer

At step "B", a firm would estimate demand and revenue, which is crucial for setting an appropriate price.

Question 20

Figure 13-2 above represents the six steps in setting price."D" represents the step at which a firm would
A)estimate demand and revenue.
B)scan competitors for prices of similar products or services.
C)select an approximate price level.
D)determine cost,volume,and profit relationships.
E)establish the price range.

Accepted Answer

The answer of Figure 13-2 above represents the six steps...

Quiz 13: Building the Price Foundation

Figure 13-2 above represents the six steps in setting price."C" represents the step at which a firm would

Figure 13-2 above represents the six steps in setting price."F" represents the step at which a firm would

A buying situation can involve comparing the costs and benefits of substitute items-such as real sugar to the sugar substitute Splenda,which,although more expensive than sugar,is purchased by many consumers because it contains no calories.This situation involves the consumer considering

A BOGO offer is retail slang that means

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

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

Figure 13-2 above represents the six steps in setting price.Which letter represents the step where a firm would estimate price elasticity?

Figure 13-2 above represents the six steps in the price-setting process."A" represents the step at which a firm would

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

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.

As shown in the McDonald's menu board photo above,McDonald's is most likely using which type of pricing strategy?

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

A firm's profit equation equals

A reference value __________.

Figure 13-2 above represents the six steps in setting price."E" represents the step at which a firm would

The Gap in-store signage photo above shows that customers can save 60 percent off a second item if they purchase one at the full price.This is an example of a __________ deal to entice shoppers to buy additional items.

Figure 13-2 above represents the six steps in setting price."B" represents the step at which a firm would

Figure 13-2 above represents the six steps in setting price."D" represents the step at which a firm would