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Homework answers / question archive / Western New Mexico University BSAD 340 Chapter 19 1)Price is best described as: a
Western New Mexico University
BSAD 340
Chapter 19
1)Price is best described as:
a.that which is given up in exchange to acquire a good or service
b. money exchanged for a good or service
c. the psychological results of purchasing
d. the cost in dollars for a good or service as set by the producer
e. the value of a barter good in an exchange
2. At Walmart, Randi saw a bag of daffodil flower bulbs and a box of plant fertilizer. The items, which were sold together, retailed at $28.50 but were marked down to $19.99. The $19.99 is the:
a. revenue. b. price.
c. profit.
d. liquidity value.
e. amortized value.
3. Which of the following statements is NOT true about price?
a. Price can relate to anything with perceived value, not just money.
b. Price is that which is given up in an exchange to acquire a product. c. Price means the same thing to the consumer and the seller.
d. The price paid is based on the satisfaction consumers expect to receive from a product.
e. Customers are interested in obtaining a perceived reasonable price.
4. When goods and services are exchanged, the trade is called:
a. exchange.
b. substitution. c. barter.
d. swap.
e. bargaining.
5. Revenue:
a. equals quantity sold times profit margin
b. equals price minus costs
c. equals return on investment
d. is synonymous with profit
e. equals price of goods times quantity sold
6. pay for every activity of the company. a. Revenues
b. Investments
c. Retained earnings
d. Profits
e. Prices
7. Money that is left over after paying for company activities is called:
a. return on investment.
b. a contribution margin. c. profit.
d. net worth.
e. a current asset.
8. At Walmart, Randi saw a bag of daffodil flower bulbs and a box of plant fertilizer. The items, which were sold together, retailed at $28.50 but were marked down to $19.99. The retailer sold one at the $28.50 price and five at the $19.99 price. The retailer’s revenue is:
a. $8.51
b. $19.99
c. $28.50 d. $128.45 e. $171.00
9. Which of the following is not a real trend that has affected the consumer market?
a. The increased availability of bargain-priced private and generic brands has put downward pressure on overall prices.
b. Buyers evaluate the price of new products against the value of existing products. c. Many firms are trying to maintain or regain their market share by raising prices.
d. The Internet has made comparison shopping easier.
e. The United States was in a recession from late 2007 until 2009.
10. For convenience, pricing objectives can be divided into three categories. They are:
a. refundable, competitive, and attainable
b. perceived, actual, and unique-situational
c. differentiated, niche, and undifferentiated
d. profit oriented, sales oriented, and status quo
e. monopolistic, fixed, and variable
11. An organization is using when it sets its prices so that total revenue is as large as possible relative to total costs.
a. profit maximization
b. market share pricing
c. demand-oriented pricing
d. sales maximization
e. status quo pricing
12. When Apple, Inc. originally introduced its iPhone, it was priced at what many believed to be about as high as the market would allow. Within weeks, Apple lowered the price of the iPhone. It appears that Apple entered the market with a approach to pricing the iPhone.
a. market share pricing b. profit maximization
c. demand-oriented
d. sales maximization
e. status quo pricing
13. When Insight Research Associates quotes a marketing research project, management will first estimate the cost to conduct the research and produce and deliver the final client report. The next step in determining the price is to add 30 percent to that cost estimate. This becomes the price estimate given to the potential research client. This suggests that Insight Research Associates uses a(n) pricing objective.
a. profit-oriented
b. market share maximization
c. status quo
d. sales maximization
e. supply–demand equalization
14. Thompson Pool and Patio is known for quality pool installations, excellent customer service, and reasonable prices. If you want to have a Thompson pool, you will have to wait about six months due to demand for their product. While Thompson could probably price its product higher, given the demand, they don’t. Instead, the company sets its price so that it will earn a reasonable level of profits. Thompson seems to base its pricing policy on:
a. profit maximization.
b. earning satisfactory profits.
c. creating retained earnings.
d. making the most money as possible.
e. decreasing consumer demand.
15. is equal to net profit after taxes divided by total assets. a. Return on investment
b. Economic order quantity
c. Target-on-sales
d. Retained earnings
e. Efficiency maximization
16. Pierre’s Ice Cream Company produces ultra rich ice cream, which it sells in the Cleveland, Ohio, area. Last year, it managed to exceed its target return on investment (ROI) for the current fiscal year. The following results were found on its financial statements:
Gross revenues: $250,000 Total assets: $500,000 Gross profits: $100,000 Total liabilities: $200,000
Net profits after tax: $ 50,000 Owner’s equity: $300,000 What was the actual ROI for Peirre’s Ice Cream Company?
a. 6.67 percent b. 10 percent
c. 22 percent
d. 28 percent
e. 100 percent
17. Britney is fifteen years old and wants to open her own business selling cupcakes to local coffee shops and restaurants. She is having a tough time deciding whether to base her pricing objectives on market share, dollar sales, or unit sales. Regardless of which she chooses, her pricing objective can be categorized as:
a. status quo.
b. profit oriented.
c. need oriented.
d. cost oriented. e. sales oriented.
18. A company using market share pricing has a pricing objective.
a. profit-oriented b. sales-oriented
c. demand-oriented
d. supply-oriented
e. status quo
19. is a company’s product sales as a percentage of total sales for that industry.
a. Return on investment
b. Profit share
c. Revenue share d. Market share
e. Contribution
20. At a price of $1,192,057, the Bugatti Veyron may be the most expensive street-legal car on the market today. Obviously, Bugatti is NOT using a(n) pricing objective in setting the price for this car.
a. inelastic or supply-oriented
b. market share or sales maximization
c. profit maximization or target return on investment
d. status quo or satisfactory profits
e. demand-oriented or supply-oriented
21. At the end of the summer, the Bloomin’ Garden Center reduced the price on all of its plants, fertilizer, and potting soil by 50 percent in order to liquidate this inventory. What type of pricing strategy is being used in this example?
a. Supply oriented
b. Sales maximization
c. Target return on investment
d. Satisfactory profit
e. Profit maximization
22. Dixie Furniture Company has recently moved to a new, larger location. At this new location, it has been unable to attract sufficient customers. Its owner did not have the cash to pay the current loan installment due on the building and inventory, so he decided to reduce all merchandise prices by at least 50 percent for a weekend sale to earn enough to make his loan payment. His pricing objective can be classified as:
a. market share maximization.
b. satisfactory profits.
c. asset maximization. d. sales maximization.
e. target ROI.
Close out sale
23. As a short-term pricing objective, can be effectively used on a temporary basis to sell off excessive inventory.
a. profit maximization
b. profit-oriented pricing
c. status quo pricing d. sales maximization
e. market share pricing
24. If a company’s pricing objective is to meet the competition or to maintain existing prices, it is using pricing.
a. head-on
b. target return on investment c. status quo
d. market share
e. demand-oriented
25. When the local Shell station raises or lowers its prices on its gasoline, the Marathon station across the street makes the same changes in its pricing. This is an example of pricing.
a. status quo
b. target return
c. market share
d. predatory
e. cost-plus
26. Which of the following statements describes an advantage of status quo pricing?
a. Status quo pricing is derived from actual costs of manufacturing.
b. Status quo pricing maintains the organization’s differential advantage.
c. Status quo pricing is active, not reactive.
d. Status quo pricing causes price wars.
e. Status quo pricing requires little planning.
27. Although many factors can influence price, the primary determinants are:
a. costs of manufacturing and distribution
b. the demand for the good and the cost to the seller
c. demand by the consumer and perceived quality
d. distribution and promotion strategies
e. stage of the product life cycle and costs to the consumer
28. The quantity of a product that will be sold in the market at various prices for a specified period is called:
a. market share. b. demand.
c. supply.
d. value.
e. revenue.
29. The price of the good or service is a key decision for a marketer because it most significantly and directly affects the product’s:
a. distribution.
b. costs.
c. demand.
d. promotion.
e. quality.
30. Most demand curves slope:
a. horizontally
b. upward and to the right
c. downward and to the left
d. vertically
e. downward and to the right
31. Peggy’s Twist Shack sells soft serve ice cream. Peggy graphed the demand per week for vanilla ice cream cones. The graph indicates a demand schedule that slopes downward and to the right. This graph indicates that the quantity of vanilla ice cream cones demanded increases as:
a. cost increases.
b. supply decreases.
c. price increases. d. price decreases.
e. supply increases.
32. The is the quantity of a product that will be sold in the market at various prices for a specified period, and is the quantity of a product that will be offered to the market by suppliers at various prices for a specified period.
a. demand; inventory b. demand; supply
c. supply; demand
d. inventory; demand
33. is the quantity of a product that will be offered to the market at various prices for a specified period.
a. Distribution b. Supply
c. Price
d. Equilibrium
e. Elasticity
34. When the price of a product is set at a level where demand and supply are the same, price
has been achieved. a. equilibrium
b. stability
c. leverage
d. symmetry
e. status quo
35. At a price of $6,000, only 191 of the Moulton 60 model bicycle are being made. If Moulton sells each one of the bicycles at that price, then a state of has been achieved.
a. symmetry
b. marketing balance
c. unitary economics
d. commerce stability e. price equilibrium
36. Bottles of Pure Hawaiian Air contain air that smells like the floral bouquet that greets tourists as they get off the plane in Hawaii. When a tourist shop began selling Pure Hawaiian Air, it charged $5 per bottle and could not keep up with the demand. It has since raised the price to $7. Now the shop is still selling all the bottles of Pure Hawaiian Air it carries, but the owner is not forced to reorder on a daily basis. The $7 price is probably a(n):
a. supply schedule.
b. symmetrical price. c. price equilibrium.
d. inventory equalizer.
e. inelastic price.
37. Consumers’ responsiveness or sensitivity to changes in price is known as:
a. break-even.
b. Equilibrium.
c. unitary revenue.
d. asymmetrical demand. e. elasticity of demand.
38. When consumers are sensitive to price changes, occurs.
a. inelastic demand
b. elastic supply c. elastic demand
d. inelastic supply
e. unitary elasticity
39. While the sales of the Apple iPhone have been great from the beginning, when Apple released its iPhone 4S and cut the price of the iPhone 4 from $399 to $199, sales exploded with one million iPhone 4 models sold the first weekend. Demand for the iPhone appears to be:
a. unitary.
b. predictable.
c. synergistic.
d. inelastic. e. elastic.
40. What happens when demand is elastic? a. As price goes up, revenue goes down.
b. As price goes down, revenue goes down.
c. As price goes up, revenue goes up.
d. As price goes up, revenue does not change.
e. As price goes down, revenue does not change.
41. If price and revenue , demand is elastic.
a. stays the same; stays the same
b. goes down; goes down c. goes down; goes up
d. goes down; stays the same
e. goes up; stays the same
42. occurs when an increase in sales exactly offsets a decrease in price so that total revenue remains exactly the same.
a. Inelastic demand
b. Functional elasticity of demand c. Unitary elasticity
d. Highly elastic demand
e. Fixed elasticity
43. When price decreases and total revenue falls, demand is:
a. elastic. b. inelastic.
c. absolute.
d. unitary.
e. stable.
44. If price goes up or down and revenue stays the same:
a. elasticity is universal.
b. elasticity is quantum.
c. elasticity is solitary. d. elasticity is unitary.
e. None of the above.
45. When the NES Group lowered the price of its professional-grade meat slicers from $2,300 to
$1,125, demand doubled from four units sold per month to eight units per month. However, total revenue dropped. This is an example of:
a. substitute goods
b. unitary elasticity
c. elastic demand
d. consumer shortage e. inelastic demand
46. When Nesco brand food hydrators sold for $59.99, Nesco sold 90 dehydrators. When the company dropped the price of its dehydrators to $44.95, it sold 145 dehydrators. Demand for the food dehydrators appears to be:
a. elastic.
b. inelastic.
c. unitary.
d. symmetrical.
e. asymmetrical.
47. Demand for which of the following products or services is most likely inelastic?
a. Fishing boats b. Wheat bread
c. Pedicures
d. Filet mignon steaks
e. Digital cameras
48. All of the following factors directly affect the elasticity of demand EXCEPT:
a. a product’s other uses.
b. inputs needed to manufacture the product.
c. availability of substitute goods.
d. price relative to a consumer’s purchasing power.
e. product durability.
49. Which of the following would imply elastic demand?
a. Price is low relative to purchasing power
b. Nondurable product
c. Low inflation rate
d. Many substitute products
e. All of these choices
50. The greater the number of different uses for a product, the more demand tends to be. a. elastic
b. inelastic
c. unitary
d. volatile
e. stable
51. What does “YMS” stands for?
a. Yorkshire manufacturing sector. b. Yield management systems.
c. Yes-man syndrome.
d. Yardstick measurement scale.
e. Year-end marketing services.
52. Yield management systems were first developed by which industry?
a. The manufacturing industry. b. The airline industry.
c. The retail industry.
d. The healthcare industry.
e. The automobile industry.
53. Yield management systems are used to:
a. determine the availability of product substitutes in complex industries that are experiencing rapid change
b. profitably fill unused capacity
c. predict necessary service levels to achieve revenue goals
d. determine whether it is financially more feasible to buy a new product or repair a broken one
e. create elastic demand for low-involvement products
54. use complex mathematical software to profitably fill unused capacity. a. Yield management systems
b. Capacity correlation systems
c. Service forecasting tools
d. Service management systems
e. Capacity management software
55. Allstate has more than 1,500 price levels determined by complex algorithms that analyze 16 credit report variables, including late payments and card balances. Allstate is using a to set prices.
a. yield management system
b. capacity correlation system
c. service forecasting tools
d. service management system
e. capacity maintenance tool
56. Which of the following statements about yield management systems (YMS) is true?
a. The first use of YMS was in the U.S. car industry as it looked for ways to compete with imports.
b. YMS eliminate the problem of simultaneous production and consumption from services.
c. YMS cannot be used by any other businesses but services.
d. YMS are complex pricing systems used to set equilibrium pricing points.
e. YMS are mathematically complex systems to make use of underutilized capacity and reduce the cost of perishability.
57. Chad has calculated the sales volume at which his lemonade stand’s costs equal revenue. Over dinner, he announced to his family that he only needed to sell 50 glasses of lemonade at $5 per glass to cover all his costs (such as lumber and nails for the stand, lemons, and sugar). Which important factor has Chad excluded from his analysis?
a. Fixed and variable cost determination b. Consumer demand
c. Target return pricing
d. Break-even analysis
e. Market share
58. Total variable costs divided by quantity of output equals:
a. average total cost
b. mean intermittent cost
c. fixed cost
d. marginal cost
e. average variable cost
59. The two types of costs a marketer needs to consider when setting prices are:
a. primary and secondary. b. variable and fixed.
c. marginal and absolute.
d. short term and long term.
e. elastic and inelastic.
60. A cost that changes with the level of output is called a(n) cost.
a. liquidity b. variable
c. fixed
d. asset
e. elastic
61. Which of the following is most likely to be a variable cost for an Internet retailer that sells spices, herbs, and seasonings to consumers?
a. Annual lease on mixer used to blend seasonings
b. Executive salaries
c. Rent for building where spices and herbs are repackaged for consumers
d. Workers’ insurance
e. Postage for shipping spices and herbs
62. For a nail salon, the costs associated with the purchase of nail polish and other products like nail polish remover, sterilized equipment, laundry service for the towels, and the beverages given to customers, are all examples of costs.
a. marginal b. variable
c. fixed
d. promotional
e. liquidity
63. costs do not change as output is increased or decreased.
a. Asset
b. Variable c. Fixed
d. Symmetrical
e. Status quo
64. Central Bark is a dog resort where pets are pampered. Which of the following is the BEST example of one of its fixed costs?
a. Payment on the building used by Central Bark
b. Dog biscuits
c. Dog collars and leashes
d. Bubble bath
e. Advertisements in local magazines
65. Mitch owns an accounting agency. The monthly payment on the land he purchased for his business, the mortgage on his small office building, and his business license are all examples of
costs.
a. marginal
b. variable c. fixed
d. promotional
e. demand
66. cost is the change in total costs associated with a one-unit change in output.
a. Variable
b. Intermittent
c. Elastic d. Marginal
e. Flex
67. Monthly output at Leisure-Time, Inc. changed from 12 to 13 prefabricated gazebos, and the total costs changed from $9,000 to $10,500. What is the marginal cost for this company?
a. $1,500 b. $2,000
c. $1,200
d. $10,000
68. When a seller determines the selling price by adding to cost an amount for profit and expenses not previously accounted for, the seller is using pricing.
a. profit maximization
b. demand-oriented
c. break-even
d. target return e. markup
69. The most popular method used by wholesalers and retailers in establishing a sales price is
pricing. a. markup
b. status quo
c. formula
d. marginal revenue
e. break-even
70. Cowboy Malone’s Electric City pays a wholesaler $700 for a television and sells it to a customer for $1,500. The markup on the television is:
a. $240
b. $160
c. $700 d. $800 e. $1,500
71. An office supply store can buy a desk for $300. If the store owner sells the desk for $450, what is the markup based on cost?
a. 15 percent
b. 20 percent
c. 25 percent
d. 33 percent e. 50 percent
72. An office supply store can buy a desk for $300. If the store owner sells the desk for $450, what is the markup based on the selling price?
a. 15 percent
b. 20 percent
c. 25 percent d. 33 percent
e. 50 percent
73. The difference between the retailer’s cost and the selling price is the: a. gross margin.
b. markup percentage.
c. profit.
d. keystone.
e. breakeven profit.
74. The owner of specialty kitchen 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
75. 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
76. Keystoning is:
a. the practice of marking up prices by 100 percent.
b. a method used for determining the point of elasticity.
c. a plan for reducing marginal costs.
d. the practice of maintaining variable costs at one-half of total fixed costs.
e. a method of changing consumers’ perceptions about price.
77. 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. keystoning.
b. target ROI pricing.
c. break-even pricing.
d. marginalizing.
e. double sourcing.
78. Profit maximization occurs when:
a. total costs equals average fixed revenue.
b. average variable costs are larger than average total costs.
c. total costs equal total variable costs.
d. marginal variable costs equal average revenues. e. marginal revenue equals marginal cost.
79. 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
80. As long as the revenue of the last unit produced and sold is greater than the cost of the last unit produced and sold,
a firm should:
a. continue manufacturing.
b. not use formula pricing.
c. continue using price equilibrium.
d. consider using sales maximization pricing.
e. reach its break-even point very shortly.
81. 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.
82. 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
83. 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.
84. Fixed cost contribution equals:
a. price times the average fixed cost.
b. price plus the average variable cost.
c. average variable cost plus average fixed cost.
d. break-even quantity times price.
e. price minus the average variable cost.
85. 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
86. Your Memory Lane produces custom made art prints that include graphics and icons to celebrate life’s special moments. For example, on his wedding anniversary, David had an art print produced that celebrated highlights of his ten years with his wife, Kathy. Suppose that Your Memory Lane sells the custom artwork for $500. It estimates its average variable costs to be $200 per unit produced. It figures its fixed costs to be $900,000 per year. How many prints does it have to sell to break even?
a. 2,000 prints
b. 1,200 prints c. 3,000 prints
d. 2,500 prints
e. 6,000 prints
87. Pet’s Eye View Digital Camera is a small, durable digital camera that pet owners can clip to their pets’ collars. A programmable timer takes pictures every few minutes, recording a photographic diary of the pet’s day. The camera sells for $25. The average variable cost for each camera is $10 and the total annual fixed costs for plant operation are $45,000. What is the break-even point in units? a. 1,800
b. 2,500
c. 3,000
d. 4,500
e. 5,000
88. Regency, Inc. makes disposable cap and gown sets for graduations. Each cap and gown set sells for $15. The average variable cost for manufacturing ten cap and gown sets is $100. Total fixed costs for the year equal $65,000. Calculate the break-even point in units.
a. 650
b. 765
c. 1,300
d. 4,334
e. 13,000
89. Ceylon Express sells bottled pasteurized tea to retailers. It has the following revenues and costs:
Sales price per bottle: $0.50
Average variable costs per bottle: $0.30 Total fixed costs (annual): $50,000.00 Tax rate: 20 percent
What is the annual break-even point in units for the company? a. 50,000
b. 250,000
c. 100,000
d. 166,667
e. 500,000
90. Which of the following statements describes a limitation associated with break-even analysis? a. It is sometimes difficult to ascertain whether a cost is fixed or variable.
b. It requires the calculation of marginal revenue.
c. It strictly considers demand.
d. It assumes variable cost per item, which is difficult to calculate.
e. It can only be expressed as a break-even point in dollar amounts.
91. Which of the following statements about pricing strategies throughout the product life cycle is NOT true?
a. During product decline, prices may also decline until there is only one competitor left in the market.
b. Price increases during the maturity stage are cost initiated instead of demand initiated.
c. The maturity stage often brings about price decreases.
d. Prices stabilize when the product enters the growth stage.
e. With inelastic demand, price will be set low during the introduction stage.
92. Prices generally begin to stabilize:
a. as a product enters the growth stage.
b. when a product if first introduced onto the market.
c. as a result of keystoning.
d. when a product enters the decline stage of the life cycle.
e. in hotly competitive markets.
93. When Apple, Inc. developed and introduced the iPad, it was unique as it essentially combined a touch-based portable computer, a wireless marketplace, and an eBook reader. As such, in the short run, it seemed that demand for the product would be inelastic, with no real existing competition. The recommend pricing strategy in such a situation would be:
a. low initial price, rising slightly when entering the growth stage. b. high initial price, falling slightly when entering the growth stage.
c. high price, continuing through growth and maturity.
d. low price, continuing through growth and maturity.
e. low price initially, rising constantly through growth and into maturity.
94. As a product enters the growth stage, prices generally begin to stabilize. One reason for this is that:
a. the product has begun to appeal to a broader market.
b. most competitors have been eliminated from the market.
c. manufacturers hope to recover their development costs quickly.
d. the available supply decreases.
e. All of the above are correct.
95. Kroger supermarkets will place well-known brands on the shelves at high prices while offering their own Kroger brand at lower prices. This practice is an example of:
a. illegal pricing.
b. selling against the brand.
c. price pressurization.
d. brand cutting.
e. private label cannibalization.
96. Manufacturers can do all of the following to regain some control over the price their products are sold for at the retail level EXCEPT:
a. require resellers to maintain prices in line with competitors’ prices.
b. developing brand loyalty in consumers by delivering quality and value.
c. avoiding doing business with price-cutting discounters.
d. franchising.
e. using an exclusive distribution system.
97. Shopping bots:
a. encourage a more creative use of advertising.
b. link manufacturers, suppliers, and customers.
c. create opportunities for prestige pricing. d. search the Web for the best price.
e. create inelastic demand.
98. Which of the following statements about the Internet is true?
a. The Internet has shifted all shopping power to consumers.
b. Consumer reviews tend to be equal in quality.
c. Business-to-business auctions on the Internet are likely to be more important than consumer auctions in the future.
d. Fraud is not a problem on the Internet.
e. Extranets are programs that search the Internet for the best price for a particular product.
99. During the hot summer months, or the week before a new class starts if there is still space available, the Nick Price golf school in Orlando, Florida, offers a 25 percent reduction to get golfers
during the off-season or those making a last-minute decision. This is an example of pricing strategy used as a(n):
a. distribution tool.
b. price enhancer.
c. product strategy.
d. direct sales tool.
e. promotion strategy.
100. Many consumers, especially when faced with an uncertain purchase decision, think that a high price:
a. is a signal of quality.
b. is an indication that consumers are being ripped off.
c. will always lead to major price discounts to wholesalers and retailers that distribute it.
d. is a sign of the company’s overall market share.
e. indicates that the brand was slipping into the decline stage of the product life cycle but has had a sudden resurgence of growth.
101. David likes New Balance running shoes. However, when he stopped by the Foot Locker to buy a new pair of running shoes, he noticed that Nike had a new pair of running shoes that cost $350. To David, the higher price of the Nike shoe indicated that it would be a better pair of running shoes. This is an example of:
a. premium pricing.
b. price lining.
c. prestige pricing.
d. exclusive pricing.
e. selective pricing.
102. When the Apple iPhone 3G was introduced, users could buy the “I Am Rich” app for a price of
$1,000. The app did nothing but display a red gem on the iPhone’s screen. The description of the app stated that this red icon would remind you (and others you show it to) “that you were rich enough to afford this.” Six of the applications were sold before Apple, Inc. removed the app from iTunes. At the $1,000 price, the author of the app was using pricing as part of his marketing approach.
a. snob appeal b. prestige
c. exclusive
d. selective
e. unique
103. Marketing managers who attempt to raise the quality image of their product by selling it at high prices are following a(n) strategy.
a. profit maximization
b. market share
c. maintained markup pricing d. prestige pricing
e. investment asset
104. Laurie knows little about cooking and does not want to spend the time to learn how to make a quiche. However, she has been asked to bring a quiche to an office retirement party. Not wanting to make a poor choice, she is likely to:
a. intuitively make the right choice.
b. avoid making a decision by not attending the party.
c. buy the most expensive pre-made quiche (perhaps paying too much), guessing that the price is related to quality.
d. research the product and buy the least expensive frozen quiche she can find.
e. buy the least expensive frozen quiche because most consumers feel that price is not directly related to quality.
105. When Jerry took delivery of his brand new (and very expensive) Jaguar automobile, he was filled with pleasure and excitement. This is an example of the effect associated with the price- quality relationship.
a. durability
b. allocative
c. prestige d. hedonistic
e. performance
106. The dimensions of quality that are important to consumers include:
a. versatility.
b. serviceability.
c. performance.
d. ease of use.
e. all of these choices.
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