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Marketing Final Exam

# She desires a markup of 30 percent based on selling

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Unformatted text preview: itchen retail store wants to determine what price she should put on a set of mixing bowls. They cost her \$7. She desires a markup of 30 percent based on selling price. Which of the following is closest to the price she should charge her customers? a. \$19 b. \$12 c. \$15 d. \$10 e. \$18 ANS: D When desired markup is based on selling price, then selling price can be calculated as follows: Retail price = Cost ÷ (1 – Desired return on sales). PTS: 1 REF: 311 KEY: CB&E Model Pricing OBJ: 19-5 TOP: AACSB Analytic MSC: BLOOMS Analysis 74. _____ is the practice of marking up prices by 100 percent (or doubling the cost to set the selling price). a. Margin pricing b. Keystoning c. Mark-on adding d. Formula doubling e. Symmetrical pricing ANS: B This is the definition of keystoning. PTS: 1 REF: 311 Thinking KEY: CB&E Model Pricing 75. Keystoning is: a. b. c. d. e. OBJ: 19-5 TOP: AACSB Reflective MSC: BLOOMS Knowledge the practice of marking up prices by 100 percent a method used for determining the point of elasticity a plan for reducing marginal costs the practice of maintaining variable costs at one-half of total fixed costs a method of changing consumers’ perceptions about price ANS: A Keystoning simply doubles the cost. PTS: 1 REF: 311 Thinking KEY: CB&E Model Pricing OBJ: 19-5 TOP: AACSB Reflective MSC: BLOOMS Knowledge 76. The Nest is a retail store owned and operated by an interior designer. The markup on all items in the store is 100 percent over cost (or double the cost). In this case, we would say the designer uses: a. b. c. d. e. keystoning target ROI pricing break-even pricing marginalizing double sourcing ANS: A Keystoning is the practice of marking up prices by 100 percent (or doubling the cost to set the selling price). PTS: 1 REF: 311 Thinking KEY: CB&E Model Pricing 77. Profit maximization occurs when: a. b. c. d. e. OBJ: 19-5 TOP: AACSB Reflective MSC: BLOOMS Application total costs equals average fixed revenue average variable costs are larger than average total costs total costs equal total variable costs marginal variable costs equal average revenues marginal revenue equals marginal cost ANS: E As long as the revenue of the last unit produced and sold is greater than the cost of the last unit produced and sold, the firm should continue manufacturing and selling the product, but maximum profit occurs when marginal revenue equals marginal cost. PTS: 1 REF: 311 Thinking KEY: CB&E Model Pricing OBJ: 19-5 TOP: AACSB Reflective MSC: BLOOMS Knowledge 78. _____ is the extra revenue associated with selling an additional unit of output. a. Average revenue b. Marginal revenue c. Marginal cost d. Net profit e. Average variable cost ANS: B Marginal revenue is also defined as the change in total revenue with a one-unit change in output. PTS: 1 REF: 311 Thinking KEY: CB&E Model Pricing OBJ: 19-5 TOP: AACSB Reflective MSC: BLOOMS Knowledge 79. As long as the revenue of the last unit produced and sold is greater than the cost of the last unit p...
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