Nova Southeastern University

MKT 5070

1)When consumers examine products, they often compare an observed price to an internal price they remember. This is known as a(n)      price.

1. 1. markup
   2. reference
   3. market-skimming
   4. accumulated
   5. target  
2. Many consumers are willing to pay $100 for a perfume that contains $10 worth of scent because the perfume is from a well-known brand. What kind of a pricing is the company depending on?
   1. going-rate pricing
   2. image pricing
   3. market-skimming pricing
   4. target pricing
   5. markup pricing

3. Pricing cues such as sale signs and prices that end in 9 are more influential                                  .
   1. when customers have substantial knowledge about prices
   2. when customers purchase the particular item regularly
   3. when product quality is standardized
   4. when product designs vary over time
   5. when prices do not vary from time to time

4. Which of the following is the first step in setting a pricing policy?
   1. selecting a pricing method
   2. selecting the pricing objective
   3. determining demand
   4. estimating cost
   5. analyzing competitors' costs, prices, and offers

5. After determining its pricing objectives, what is the next logical step a firm should take in setting its pricing policy?
   1. It should analyze its competitors' costs, prices, and offers.
   2. It should select its pricing method.
   3. It should select its final price.
   4. It should determine the demand for its product.
   5. It should estimate the cost of its product.

6. After estimating the demand and costs associated with alternative prices, a company has chosen to price its product in such a way that it gains the highest rate of return on its investment. The company is looking to           .
   1. maximize its market share
   2. skim the market
   3. become a product-quality leader
   4. survive in the market
   5. maximize its current profit

7. Companies who believe that a higher sales volume leads to lower unit costs and higher long-run profits are attempting to                                                                  .
   1. maximize their market share
   2. skim the market
   3. become a product-quality leader
   4. merely survive in the market
   5. maximize their current profits

8. A company that is looking to maximize its market share would do well to follow

                      pricing.

1. 1. markup
   2. market-penetration
   3. market-skimming
   4. survival
   5. target-return  

9. When a company introduces a product at a very high price and then gradually drops the price over time, it is pursuing a                                                                             strategy.
   1. market-penetration pricing
   2. market-skimming pricing
   3. value-pricing
   4. switching cost
   5. loss-leader pricing

10. When Apple introduced its iPhone, it was priced at $599. This allowed Apple to earn the maximum amount of revenue from the various segments of the market. Two months after the introduction, the price has come down to $399. What kind of a pricing did Apple adopt?
    1. loss-leader pricing
    2. market-penetration pricing
    3. market-skimming pricing
    4. target-return pricing
    5. value pricing  

11. Market skimming pricing makes sense under all the following conditions, EXCEPT

                     .

1. 1. if a sufficient number of buyers have a high current demand
   2. if the unit costs of producing a small volume are high enough to cancel the advantage of charging what the traffic will bear
   3. if the high initial price does not attract more competitors to the market
   4. if consumers are likely to delay buying the product until its price drops
   5. if the high price communicates the image of a superior product

12. Companies that aim to                          strive to be affordable luxuries.
    1. survive in the market
    2. partially recover their costs
    3. maximize their market share
    4. pursue value pricing
    5. be product-quality leaders Answer: E

13. Starbucks, Aveda, and BMW have been able to position themselves within their categories by combining quality, luxury, and premium prices with an intensely loyal customer base. These companies are employing a        strategy.
    1. market-skimming
    2. market-penetration
    3. survival
    4. market share maximization
    5. product-quality leadership

14. Consumers are less price sensitive                          .
    1. to high cost items
    2. when they frequently change their buying habits
    3. when there are more substitutes
    4. when there are more competitors
    5. when they do not readily notice higher prices

15. Consumers are less price sensitive when                           .
    1. price is only a small part of the total cost spent on the product over its lifetime
    2. they perceive the higher prices to be unjustified
    3. they change their buying habits regularly
    4. there are many substitutes and competitors in the market
    5. they are buying high-cost items

16. If demand hardly changes with a small change in price, the demand is said to be

                     .

1. 1. strained
   2. marginal
   3. inelastic
   4. flexible
   5. unit elastic

17. Costs that do not vary with production levels or sales revenue are known as

.

1. 1. overhead costs
   2. variable costs
   3. average costs
   4. opportunity costs
   5. total costs  

18. A company must make payments each month for rent, heat, interest, and salaries.

These are                       .

1. 1. total costs
   2. fixed costs
   3. variable costs
   4. opportunity costs
   5. target costs  

19. Costs that differ directly with the level of production are known as                               .
    1. fixed costs
    2. overhead costs
    3. opportunity costs
    4. target costs
    5. variable costs  

20.                        consist of the sum of the fixed and variable costs for any given level of production.
    1. Total costs
    2. Average costs
    3. Opportunity costs
    4. Learning costs
    5. Target costs  

21.                        is the cost per unit at that level of production.
    1. Target cost
    2. Average cost
    3. Marginal cost
    4. Opportunity cost
    5. Fixed cost  

22. The decline in the average cost of production with accumulated production experience is called the        .
    1. demand curve
    2. supply chain
    3. learning curve
    4. value chain
    5. indifference curve