MKTG 07 -...

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Unformatted text preview: 1.
Which
of
the
statements
about
costs
is
TRUE?
 (In
the
long
run,
your
R
has
to
exceed
your
marginal
cost.)
 2.
Last
year,
BruceCo
sold
1000
coffee
cups
for
$10
each.
If
the
cost
for
each
cup
was
$4.70,
what
was
the
total
 revenue
for
BruceCo?
(10000)
 3.
Which
of
the
following
statements
about
the
relationship
between
price
and
cost
is
FALSE?
 (price
has
to
be
higher
than
total
cost)
 
 4.
Last
year,
BruceCo
sold
1000
coffee
cups
for
$10
each.
This
year,
the
company
is
planning
on
selling
1500
 coffee
cups.
In
order
to
cover
the
additional
investment
they
will
charge
$10.50
for
the
first
500
cups,
$10.25
for
 the
second
500
cups
and
$10
for
the
last
500.
Each
cup
costs
$4.70
to
produce.
What
is
the
marginal
profit
for
the
 1125th
cup?
(5.3)
 
 5.
Price
elasticity
is
the
slope
of
the
demand
curve.
When
price
elasticity
is
LOW?
 (a
small
change
in
price
will
lead
to
a
small
change
in
quantity
demanded)
 
 6.
The
Senseo
coffee
maker
is
a
machine
that
makes
one
cup
of
coffee
at
a
time
from
specially
prepared
'pods'
of
 coffee.
You
can
get
the
coffee
maker
at
a
very
reasonable
price.
However,
you
can
only
get
refill
pods
from
the
 manufacturer
and
they
tend
to
be
expensive.
This
is
an
example
of…?
(captive
pricing)
 7.
Many
large
retail
stores
use
____________
because
it
would
be
impractical
to
calculate
the
correct
price
for
 thousands
of
items
individually?
(standard
markup
pricing)
 8.
The
Broyhill
furniture
company
designed
a
sofa
that
retailers
could
sell
for
$699
and
still
make
a
profit.
This
 was
because
retailers
had
told
the
company
they
needed
a
promotional
sofa
that
would
cost
less
than
the
$1000
 or
more
for
a
typical
sofa.
They
would
feature
the
promotional
sofa
in
their
advertisements
to
bring
customers
 into
the
store.
This
is
an
example
of?
(target
profit
pricing)
 9.
Experience
has
shown
that
customers
perceive
a
price
of
$99.99
to
be
significantly
lower
than
a
price
of
$100.
 The
pricing
strategy
that
takes
advantage
of
this
phenomenon
is
called
___________
(odd‐even
pricing)
 10.
Companies
that
have
several
products
in
the
same
category
might
use
____________
as
a
way
to
establish
 different
positions
for
each
product
in
the
category
in
the
mind
of
the
consumer?
(price
line
strategy)
 11.
Which
of
the
following
is
a
form
of
price?
(All)
 12.
Demand
factors
are
factors
that
affect
consumers'
willingness
and
ability
to
purchase
products.
Demand
 factors
such
as
__________
affect
what
consumers
ARE
ABLE
to
buy?
(consumer
income)
 13.
The
market
structure
in
which
companies
have
the
MOST
flexibility
in
setting
prices
is?
(pure
monopoly)
 14.
BruceCo
is
planning
on
selling
coffee
cups
for
$14
each.
The
company
can
buy
the
cups
for
$2.00
and
have
 them
printed
for
$1.50.
The
package
costs
fifty
cents.
There
is
a
one‐time
set
up
charge
from
the
printer
of
 $1,000.
In
order
for
the
project
to
go
forward,
the
company
needs
to
show
a
$10,000
profit.
How
many
cups
of
 coffee
will
BruceCo
have
to
sell
in
order
for
this
project
to
be
acceptable?
(1100)
 15.
For
many
products
such
as
candy
bars,
there
is
a
price
consumers
expect
to
pay
for
the
product.
Companies
 using
the
_____________
to
setting
prices
will
use
this
price
as
a
basis
for
positioning
their
products
as
prestige
 or
value
brands?
(above
or
below
approach)
 16.
Which
of
the
following
is
tactics
is
most
likely
to
encourage
customers
to
pay
your
asking
price
for
a
product.
 (A
price
tag
that
looks
like
it
was
professionally
printed)
 17.
For
companies
operating
in
an
oligopoly
market
structure,
prices
tend
to
be
very
stable.
In
these
situations,
 the
company
with
the
largest
market
share
might
raise
its
prices
in
hopes
that
other,
smaller
companies
will
 follow.
If
this
happens,
the
price
will
increase.
This
is
called
the
____________
to
setting
prices?

 (Price
leadership
approach)
 
 18.
For
prestige
products
‐
products
that
are
consumed
socially
and
confer
status
on
their
owners?
 (unit
sales
can
decrease
if
prices
are
lowered)
 
 19.
The
__________
to
setting
prices
weighs
consumer
tastes
and
preferences
more
heavily
than
costs
and
 profits.
(demand
based
approach)
 
 20.
When
marginal
revenue
is
NEGATIVE
and
prices
decrease?
(unit
sales
increase)
 
 21.
Bruce
is
planning
on
selling
sandwiches
in
class
for
$5
each.
Food
costs
are
$4.
He
will
also
need
to
buy
an
 insulated
cooler
to
store
the
sandwiches.
This
cooler
costs
$10.
How
many
sandwiches
will
Bruce
have
to
sell
in
 order
for
this
project
to
break
even?(10)
 22.
Price
elasticity
is
the
slope
of
the
demand
curve.
When
price
elasticity
is
HIGH?
 (a
small
change
in
price
will
lead
to
a
large
change
in
quantity
demanded)
 
 23.
Price
elasticity
is
the
slope
of
the
demand
curve.
When
price
elasticity
is
HIGH?
 (you
can
increase
revenues
by
cutting
prices)
 
 24.
The
San
Francisco
Municipal
Railway
(MUNI)
Charges
$1.50
for
an
adult
passenger.
Once
you
have
purchased
 a
fare
(and
taken
a
transfer
as
proof
of
payment)
you
can
ride
anywhere
on
the
system
for
the
next
90
minutes.
 This
is
an
example
of
__________
geographic
pricing.
(uniform
delivered
price)
 

 25.
The
____________
approach
to
new
product
pricing
sets
prices
low
for
a
while
in
order
to
encourage
people
 to
try
the
product
and
then
raises
the
price
once
the
new
product
gained
traction
in
the
marketplace?
(trial
price)
 26.
The
disadvantage
to
the
__________
to
setting
prices
is
that
it
doesn't
take
into
account
whether
customers
 are
willing
to
pay
the
price
your
need
to
charge?
(cost‐based
approach)
 27.
BruceCo
is
planning
on
selling
coffee
cups
for
$14
each.
The
company
can
buy
the
cups
for
$2.00
and
have
 them
printed
for
$1.50.
The
package
costs
fifty
cents.
There
is
a
one‐time
set
up
charge
from
the
printer
of
 $1,000.
How
many
coffee
cups
will
BruceCo
have
to
sell
in
order
to
break
even?
(100)
 28.
Value
is
a
function
of
___________
and
___________?
(perceived
benefits,
perceived
cost)
 29.
Last
year,
BruceCo
sold
1000
coffee
cups
for
$10
each.
If
the
cost
for
each
cup
was
$4.70,
how
much
profit
did
 BruceCo
make?
(53000)
 30.
In
addition
to
determining
the
amount
of
money
you
will
receive
for
your
product,
price
serves
as
a
____tool,
 signaling
to
customers
where
your
product
stands
in
relation
to
similar
product
offerings?
(positioning)
 31.
Sometimes
companies
will
sell
a
product
below
their
cost
of
production
for
a
short
period
in
order
to
gain
 market
share
or
to
reduce
excess
inventory.
This
____________
can
be
risky,
especially
if
competitors
match
the
 reduced
price
making
it
difficult
to
raise
prices
back
to
long‐term
profitable
levels.
(price
floor
pricing)
 32.
Hewlett
Packard
makes
a
variety
of
inkjet
printers
for
personal
computers.
You
can
buy
a
basic
'all
in
one'
 printer
that
scans,
copies
and
prints
for
less
than
$99.
Replacement
ink
cartridges
from
Hewlett
Packard
cost
 between
$30
and
$60
depending
on
whether
it
is
black
and
white
or
color
ink.
This
is
an
example
of
 _____________?
(captive
pricing)
 33.
The
____________
approach
to
new
product
pricing
sets
prices
high
in
order
to
recover
development
costs
 more
quickly?
(skimming)
 34.
Manny
opened
a
coffee
shop
right
across
the
street
from
a
Barstucks
coffee
shop.
Manny
had
studied
the
 market
and
he
knew
that
it
cost
Barstucks,
a
national
chain,
$1.40
to
make
a
cup
of
coffee
that
sold
for
$2.50.
 Manny
could
make
the
same
cup
of
coffee
for
$1.10
and
could
sell
it
profitably
for
$2.25.
The
day
he
opened
his
 shop,
the
Barstucks
across
the
street
offered
a
99cent
cup
of
coffee
special.
No
customers
came
to
Manny'store
 and
he
had
to
close.
The
day
he
closed
his
store,
the
Barstucks
99
cent
special
ended.
This
was
probably?
 (predatory
pricing)
 35.
Even
if
you
have
never
seen
a
product
before,
you
may
have
a
sense
of
what
it
should
sell
for
based
on
similar
 products
that
you
have
experienced
in
the
past.
Marketers
need
to
be
aware
of
this
___________
when
they
set
 prices
for
new
products?
(expected
price)
 36.
Last
year,
BruceCo
sold
1000
coffee
cups
for
$10
each.
This
year,
the
company
is
planning
on
selling
1500
 coffee
cups.
In
order
to
cover
the
additional
investment
they
will
charge
$10.50
for
the
first
500
cups,
$10.25
for
 the
second
500
cups
and
$10
for
the
last
500.
Each
cup
costs
$4.70
to
produce.
What
is
the
marginal
profit
for
the
 700th
cup?
(5.55)
 37.
Price
elasticity
is
the
slope
of
the
demand
curve.
When
price
elasticity
is
LOW?

 (u
can
increase
revenues
by
increasing
prices)
 
 38.
The
____________
approach
to
new
product
pricing
sets
prices
high
in
order
to
recover
development
costs
 more
quickly?
(skimming)
 39.
It
has
been
said
that
no
two
people
on
an
airplane
pay
the
same
price
for
a
ticket.
Prices
tend
to
be
lower
if
 you
are
willing
to
book
you
trip
well
in
advance
and
tend
to
be
much
higher
if
you
have
to
book
your
trip
on
short
 notice.
A
non‐refundable
ticket
costs
less
than
a
refundable
ticket.
Airlines
use
this
___________
in
order
to
 maximize
the
revenue
they
earn
from
each
flight?
(yield
management
pricing)
 40.
Which
of
the
following
is
NOT
part
of
the
price
of
a
credit
card
for
college
students?
(All)
 41.
What
do
we
mean
when
we
speak
of
the
price/value
heuristic?
 (in
general,
people
perceive
a
product
with
a
higher
price
to
be
a
better
product)
 
 42.
In
general,
the
greater
the
_______
for
a
product,
the
higher
the
price
you
can
charge
for
the
product.
 (demand)
 43.
The
biggest
drawback
to
every
day
low
pricing
is?

 (It
is
easy
for
competitors
to
offer
their
products
at
a
price
slightly
lower
than
yours.)
 
 44.
For
many
products
such
as
candy
bars,
there
is
a
price
consumers
expect
to
pay
for
the
product.
Companies
 using
the
_____________
to
setting
prices
will
use
this
price
for
their
products?
(status
quo
pricing
approach)
 45.
_________
is
what
is
given
up
in
an
exchange
to
acquire
a
good
or
service?
(price)
 46.
Which
of
the
following
statements
about
the
relationship
between
price
and
cost
is
FALSE?
 (price
has
to
be
higher
than
total
cost)
 
 Last
year,
BruceCo
sold
1000
coffee
cups
for
$10
each.
This
year,
the
company
is
planning
on
selling
1500
coffee
 cups.
In
order
to
cover
the
additional
investment
they
will
charge
$10.50
for
the
first
500
cups,
$10.25
for
the
 second
500
cups
and
$10
for
the
last
500.
Each
cup
costs
$4.70
to
produce.
What
is
the
average
revenue?
(10.25)
 48.
Which
of
the
following
is
an
example
of
a
question
that
can
be
answered
using
breakeven
analysis?
(All)
 49.
The
Bay
Area
Regional
Transit
Authority
(BART)
operates
a
light
rail
system
in
the
bay
are.
Passengers
 purchase
a
ticket
with
a
magnetic
strip
that
keeps
track
of
how
much
money
is
on
the
ticket.
The
cost
for
a
ride
is
 anywhere
from
about
$3
to
about
$10
depending
on
how
far
you
are
going.
You
can
go
to
any
of
the
downtown
 stops
for
the
same
price.
BART
is
using
___________
geographic
pricing?
(zone
delivered
price)
 50.
In
many
market
situations,
such
as
an
oligopoly
or
monopolistic
competition,
there
is
a
very
strong
 expectation
of
what
the
price
for
a
product
should
be.
In
these
situations,
many
businesses
engage
in
 ____________
by
using
advertising,
free‐product
offers
or
bonus
packaging
to
differentiate
their
product.
 (non‐price
competition)
 
 51.
When
marginal
revenue
is
POSITIVE
and
prices
decrease?
(All)
 52.
BruceCo
is
planning
on
selling
backpacks
for
$100
each.
The
company
can
buy
the
backpacks
for
$30.00
and
 have
them
customized
for
$20.00.
T
There
is
a
one‐time
set
up
charge
of
$1,000
for
customization.
In
order
for
 the
project
to
go
forward,
the
company
needs
to
show
a
$10,000
profit.
How
many
backpacks
will
BruceCo
have
 to
sell
in
order
for
this
project
to
be
acceptable?
(220)
 53.
Demand
factors
are
factors
that
affect
consumers
willingness
and
ability
to
purchase
products.
Demand
 factors
such
as
__________
affect
what
consumers
WANT
to
buy?
(consumer
tastes)
 54.
In
order
for
a
firm
to
have
an
increase
in
market
share
as
a
pricing
objective,
it
is
assumed
that
the
firm
has?
 (profits)
 55.
____________
are
the
costs
of
production
that
are
tied
to
and
vary
with
the
number
of
units
produced?
 (variable
cost)
 56.
An
inverse
demand
curve
is
usually
associated
with
luxury
or
prestige
goods.
With
an
inverse
demand
curve,
 within
a
certain
range
of
prices.
 (An
increase
in
price
will
lead
to
an
increase
in
the
quantity
demanded)
 
 57.
Bruce
is
planning
on
selling
sandwiches
in
class
for
$5
each.
Food
costs
are
$4.
He
will
also
need
to
buy
an
 insulated
cooler
to
store
the
sandwiches.
This
cooler
costs
$10.
Bruce
needs
to
make
a
profit
of
$25
to
make
it
 worth
his
while.
How
many
sandwiches
does
Bruce
need
to
sell
to
make
the
project
worthwhile?
(35)
 58.
BruceCo
is
planning
on
selling
backpacks
for
$100
each.
The
company
can
buy
the
backpacks
for
$30.00
and
 have
them
customized
for
$20.00.
There
is
a
one‐time
set
up
charge
of
$1,000
for
customization.
How
many
 backpacks
will
BruceCo
have
to
sell
in
order
to
break
even?
(20)
 59.
_______________
is
used
in
situations
where
the
final
cost
of
a
good
or
service
may
not
be
available
at
the
 time
the
agreement
is
reached?
(cost
plus
pricing)
 60.
Last
year,
BruceCo
sold
1000
coffee
cups
for
$10
each.
If
the
cost
for
each
cup
was
$4.70,
what
was
the
 average
revenue
for
BruceCo?
(10)
 61.
Bruce
went
into
an
appliance
store
to
purchase
a
32"
LCD
tv
for
$799
as
advertised
in
the
local
paper.
When
 he
got
to
the
store,
he
was
told
that
all
of
the
$799
tv's
had
been
sold,
but
there
was
a
32"
LCD
tv
available
for
 $899
that
he
could
purchase
today.
Bruce
may
have
been
a
victim
of?
(Bait
and
switch
pricing)
 62.
Nintendo
chose
a
___________
approach
to
pricing
the
new
Nintendo
DS
because
they
felt
the
market
for
 this
product
is
price
sensitive,
there
are
major
economies
of
scale
to
be
achieved,
and
both
Sega
and
Microsoft
 would
be
introducing
new
game
systems
shortly?
(penetration)
 63.
For
many
products
such
as
candy
bars,
there
is
a
price
consumers
expect
to
pay
for
the
product.
Retailers
 using
the
_____________
to
setting
prices
will
offer
the
product
at
a
very
low
price
in
order
to
attract
customers
 into
their
store?
(loss‐leader
approach)
 64.
Bruce
ordered
a
test
bank
from
teachersupplies.com.
The
cost
of
the
package
was
$39.95
plus
sales
tax
(you
 are
responsible
for
California
sales
tax,
even
if
you
order
online).
He
chose
to
have
the
product
shipped
via
UPS
 ground
because
it
was
the
least
expensive
shipping
option.
Teachersupplies.com
is
using
a
___________
 approach
to
geographic
pricing?
(FOB
factory)
 65.
The
__________
to
setting
prices
is
based
on
understanding
an
organization's
cost
structure
and
profit
 requirements?
(cost
based
approach)
 66.
In
an
oligopoly
situation,
where
the
demand
curve
for
the
product
is
kinked,
what
is
the
best
strategy
to
 increase
profits?
(maintain
price
and
reduce
costs)
 67.
Which
of
the
following
is
NOT
a
factor
that
will
affect
the
price
elasticity
of
demand
for
a
particular
product?
 (increase
in
price
for
the
product)
 68.
Many
airlines
advertise
low
prices
on
the
internet.
When
you
actually
book
the
ticket,
you
may
find
that
there
 are
destination
charges,
service,
fees
and
other
costs
that
significantly
increase
the
cost
of
the
ticket.
The
airlines
 use
this
_________
tactic
to
make
their
prices
appear
to
be
lower
to
customers
who
are
comparing
prices.
 (multiple
price)
 69.
For
prestige
products
‐
products
that
are
consumed
socially
and
confer
status
on
their
owners?
 (Unit
sales
of
the
product
can
decrease
if
prices
are
lowered.)
 70.
Many
television
infomercials
advertise
a
product
at
a
very
low
price.
After
you
order
the
product,
you
find
 there
is
a
fairly
substantial
shipping
and
handling
charge.
When
you
figure
in
the
extra
charges,
the
product
may
 be
more
expensive
than
other,
similar
products
that
you
were
considering.
This
is
an
example
of
a
 ________tactic?
(multiple
price)
 71. According
to
the
information
in
class,
the
fundamental
issue
in
geographic
pricing
tactics
is?
 (Whether
the
buyer
or
the
seller
pays
for
the
cost
of
transporting
the
product
to
the
customer.)
 
 73.
Colgate
Palmolive
developed
a
new
line
of
Colgate
brand
mouthwash.
As
part
of
the
introduction,
they
 included
a
free
sample
of
Colgate
mouthwash
with
every
tube
of
Colgate
toothpaste.
This
is
an
example
of?
 (Price
bundling)
 74.
Which
of
the
following
is
NOT
a
factor
that
will
affect
the
price
elasticity
of
demand
for
a
particular
product?

 (An
increase
in
price
for
the
product)
 75.
In
an
oligopoly
situation,
where
the
demand
curve
for
the
product
is
kinked,
what
is
the
best
strategy
to
 increase
profits?

(Maintain
price
and
reduce
cost)
 76. In general, you have more flexibility in setting your prices in the _________ stage of the product life cycle than in the _________ stage of the product life cycle? (Introductory, maturity) 
 
 ...
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This note was uploaded on 09/19/2011 for the course MKTG 431 taught by Professor Brucerobertson during the Spring '07 term at S.F. State.

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