Marketing Final Exam

C penetration pricing is the logical choice given an

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Unformatted text preview: all production runs e. if unit costs are high ANS: C Penetration pricing is the logical choice given an elastic demand curve. PTS: 1 REF: 321 Thinking KEY: CB&E Model Pricing OBJ: 20-1 TOP: AACSB Reflective MSC: BLOOMS Comprehension 17. Penetration pricing means charging a relatively low price for a product as a way to reach the mass market. The low price is designed to capture a large share of a substantial market. Thus, penetration pricing: a. tends to be more effective in a less pricesensitive market b. tempts competitors to enter the market c. provides a large profit per unit sold d. recoups product development costs quickly e. tends to lower production costs ANS: E The low price is designed to capture a large share of the market, resulting in lower production costs. Production costs are lowered because of economies of scale in production. PTS: 1 REF: 321 Thinking KEY: CB&E Model Pricing OBJ: 20-1 TOP: AACSB Reflective MSC: BLOOMS Analysis 18. A firm charging a price identical to or very close to the competition’s price is using a _____ strategy. a. differentiation pricing b. penetration pricing c. preemptive pricing d. status quo pricing e. leader pricing ANS: D Status quo pricing is also called meeting the competition or going rate pricing. PTS: 1 REF: 322 Thinking KEY: CB&E Model Pricing OBJ: 20-1 TOP: AACSB Reflective MSC: BLOOMS Knowledge 19. JCPenney sends representatives to shop at similar retailers to make sure it is charging comparable prices for its products. JCPenney probably uses a _____ strategy. a. leader pricing b. preemptive pricing c. status quo pricing d. flexible pricing e. functional pricing ANS: C Status quo pricing means meeting the competition. PTS: 1 REF: 322 Thinking KEY: CB&E Model Pricing OBJ: 20-1 TOP: AACSB Reflective MSC: BLOOMS Application 20. State laws that put a lower limit on wholesale and retail prices are called _____. In states that have these laws, selling below cost is illegal. a. unfair trade practice acts b. price floor laws c. protectionism acts d. transparency laws e. price edicts ANS: A Unfair trade practice acts are laws that prohibit wholesalers and retailers from selling below cost. PTS: 1 REF: 321 OBJ: 20-2 TOP: AACSB Reflective Thinking KEY: CB&E Model Pricing MSC: BLOOMS Knowledge 21. States developed unfair trade practice acts to a. b. c. d. e. enforce the Sherman Act that makes bait pricing illegal prevent oligopoly leaders from getting together and fixing prices at the highest the market will bear establish penalties for companies that break the Clayton Act by engaging in predatory pricing make sure that all pricing policies are equitable protect small, local firms from giant companies that operate efficiently on razorthin profit margins ANS: E Unfair practice acts protect small businesses. PTS: 1 REF: 322 Thinking KEY: CB&E Model Pricing OBJ: 20-2 TOP: AACSB Reflective MSC: BLOOMS Analysis 22. In 2008, United Airlines and American Airlines disclosed settlements in...
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