B116 - Ch.11 Flashcards
There are three basic options when it comes to pricing objectives: maximizing profit, increasing ROI, and maximizing sales volume.
Select one:
True
False
True
A firm that uses backward pricing first determines the price consumers are willing to accept.
Select one:
True
False
True
A company’s board of directors is concerned about the ROI. A profit maximization pricing strategy will be seriously considered.
Select one:
True
False
True
Phantom freight is of greatest concern to
Select one:
a.
customers located close to the supplier.
b.
the corporate lawyer.
c.
the sales manager.
d.
the supplier’s accountant.
e.
customers located far from the supplier.
a.
customers located close to the supplier.
A uniformed delivered price means that all buyers pay the same freight charge.
Select one:
True
False
True
A retailer prices a product at $699 instead of $700. This is an example of
Select one:
a.
market pricing.
b.
price skimming.
c.
unit pricing.
d.
price penetration.
e.
odd-even pricing.
e.
odd-even pricing.
Double ticketing is now less of a problem as retailers have moved to ________ at the point of sale.
Select one:
a.
electronic surveillance
b.
lowest price scanning
c.
automatic discounts
d.
electronic price scanning
e.
electronic ticketing
d.
electronic price scanning
A small hardware store files a complaint with the Competition Bureau concerning alleged predatory pricing practices of a mega-retailer of hardware in the same market. Chances are that there will not be a conviction because
Select one:
a.
it is likely that the small hardware store owner is reacting emotionally, not rationally, to increased competition.
b.
the megastore probably has access to better legal representation.
c.
there is a huge backup in the department of similar complaints and chances of this complaint being heard are slim.
d.
it is unlikely that the mega-retailer would need to use such a tactic to steal market share.
e.
it is difficult to prove that the prices are unreasonably low, especially since the megastore can take advantage of cost reductions resulting from economies of scale.
e.
it is difficult to prove that the prices are unreasonably low, especially since the megastore can take advantage of cost reductions resulting from economies of scale.
Price scanning at the point of sale has done little to solve the problems created by double ticketing.
Select one:
True
False
False
If a downtown hotel offers a 40% discount to families for weekend reservations in the winter months, a time when rooms are usually in abundant supply, that discount would be called
Select one:
a.
a cash discount.
b.
a seasonal discount.
c.
a rebate.
d.
a promotional allowance.
e.
a trade allowance.
b.
a seasonal discount.
The pricing policy that is most attractive to customers living close to the manufacturer is
Select one:
a.
zone pricing.
b.
freight absorption.
c.
uniform delivered pricing.
d.
FOB origin.
e.
FOB destination.
d.
FOB origin.
Loss leaders are products that are a continual drain on a company’s profits.
Select one:
True
False
False
The price elasticity of demand refers to
Select one:
a.
how quickly demand rebounds when a price changes.
b.
the willingness of consumers to purchase a product in times of high supply.
c.
the effect of a price change on the volume purchased.
d.
the range of prices in a product line.
e.
the fact that consumers purchase greater quantities at higher prices.
c.
the effect of a price change on the volume purchased.
The adoption of price points for the various lines of merchandise a retailer carries is
Select one:
a.
customary pricing.
b.
price lining.
c.
odd-even pricing.
d.
discount pricing.
e.
unit pricing.
b.
price lining.
Prestige pricing is an example of what type of pricing policy?
Select one:
a.
geographic pricing
b.
psychological pricing
c.
flexible pricing
d.
supply
e.
promotional pricing
b.
psychological pricing
Establishing price ranges of $100, $300, and $400 is an example of unit pricing.
Select one:
True
False
False
Of the following, which practice is more typical of manufacturers than retailers?
Select one:
a.
establishing prestige pricing
b.
setting odd-even pricing
c.
using customary pricing
d.
offering performance allowances
e.
engaging in psychological pricing
d.
offering performance allowances
“The sales in units or dollars that are necessary for total revenue to equal total costs at a certain price” is known as
Select one:
a.
profit maximization.
b.
status quo pricing.
c.
target pricing.
d.
breakeven analysis
e.
cost-plus pricing.
d.
breakeven analysis
Consider this situation: Molson raises the price of a case of beer by $2.00 and Labatt follows suit. Consumers tolerate such an increase and purchase the same quantities of beer as before. In this case, demand is
Select one:
a.
complementary.
b.
marginal.
c.
elastic.
d.
inelastic.
e.
cross-elastic.
d.
inelastic.
A manufacturer of athletic footwear has determined its total costs are $25 per pair of shoes. The company sells the footwear through wholesalers who in turn sell to retailers. The required wholesaler markup is 20% on cost while the required retailer markup is 50% on cost. The footwear manufacturer needs a markup of 25% on cost. What is the retail selling price?
Select one:
a.
$56.25
b.
$60.00
c.
$55.25
d.
$65.00
e.
$48.75
a.
$56.25
