Marketing Final Exam

Using price equilibrium consider using sales

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Unformatted text preview: roduced and sold, a firm should: a. continue manufacturing b. c. d. e. not use formula pricing continue using price equilibrium consider using sales maximization pricing reach its break-even point very shortly ANS: A Diminishing returns have not set in, so the firm should continue manufacturing. PTS: 1 REF: 311 Thinking KEY: CB&E Model Pricing OBJ: 19-5 TOP: AACSB Reflective MSC: BLOOMS Comprehension 80. The point at which marginal cost and marginal revenue are equal always results in: a. maximization of elasticity b. maximization of revenue c. maximization of costs d. maximization of profits e. break-even equilibrium ANS: D Until the point where MR = MC, each unit of sales has contributed to additional profit; therefore, profit, not revenue or costs, has been maximized at MR = MC. PTS: 1 REF: 311 Thinking KEY: CB&E Model Pricing OBJ: 19-5 TOP: AACSB Reflective MSC: BLOOMS Comprehension 81. _____ determine what sales volume must be reached before the company’s total revenue equals total costs and no profits are earned. a. Marginal revenue estimates b. Price equilibrium analyses c. Break-even analyses d. Average total cost (ATC) figures e. Marginal costs of goods sold ANS: C At the break-even point, costs are equal to revenue, and profit is zero. PTS: 1 REF: 311 Thinking KEY: CB&E Model Pricing OBJ: 19-5 TOP: AACSB Reflective MSC: BLOOMS Knowledge 82. The typical break-even model assumes a given fixed cost and a: a. variable per unit cost b. constant inventory turnover c. markup cost attained through keystoning d. constant production schedule e. constant average variable cost ANS: E Break-even quantity = Total fixed costs ÷ (Price – Average variable cost). PTS: 1 REF: 311 Thinking KEY: CB&E Model Pricing 83. Fixed cost contribution equals: a. b. c. d. e. OBJ: 19-5 TOP: AACSB Reflective MSC: BLOOMS Comprehension price times the average fixed cost price plus the average variable cost average variable cost plus average fixed cost break-even quantity times price price minus the average variable cost ANS: E Fixed cost contribution is what is left over after variable costs are covered, so it is equal to price minus the average variable cost. PTS: 1 REF: 312 Thinking KEY: CB&E Model Pricing OBJ: 19-5 TOP: AACSB Reflective MSC: BLOOMS Comprehension 84. Your Memory Lane creates custom art prints that use graphs and icons in a street scene to commemorate special occasions. Suppose that Your Memory Lane has priced its product at $350 per print. Further, it has determined that the company’s fixed cost is $12,500, with average variable costs per print of $250. What is the fixed cost contribution per print? a. $225 b. $100 c. $605 d. $2 e. $1 ANS: B Fixed cost contribution is the price minus the average variable cost: $350 – $250 = $100. PTS: 1 REF: 312 KEY: CB&E Model Pricing OBJ: 19-5 TOP: AACSB Analytic MSC: BLOOMS Analysis 85. Your Memory Lane produces custom-made art prints that include graphics and icons to celebrate life’s spe...
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This document was uploaded on 09/29/2013.

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