Chapter 20

Question 1

Price

Answer 1

The value paid for a product in a marketing exchange.

Question 2

Barter

Answer 2

The trading of products.

Question 3

Price Competition

Answer 3

Emphasizing price as an issue and matching or beating competitor’s prices.

Question 4

Nonprice Competition

Answer 4

Emphasizing factors other than price to distinguish a product from competing brands.

Question 5

Demand Curve

Answer 5

A graph of the quantity of products expected to be sold at various prices if other factors remain constant.

Question 6

Price Elasticity of Demand

Answer 6

A measure of the sensitivity of demand to changes in price.

Question 7

Fixed Costs

Answer 7

Costs that do not vary with changes in the number of units produced or sold.

Question 8

Average Fixed Cost

Answer 8

The fixed cost per unit produced.

Question 9

Variable Costs

Answer 9

Costs that vary directly with changes in the number of units produced or sold.

Question 10

Average Variable Cost

Answer 10

The variable cost per unit produced.

Question 11

Total Cost

Answer 11

The sum of averaged fixed and average variable costs times the quantity produced.

Question 12

Average Total Cost

Answer 12

The sum of the average fixed cost and the average variable cost.

Question 13

Marginal Cost (MC)

Answer 13

The extra cost incurred by producing one more unit of a product.

Question 14

Marginal Revenue (MR)

Answer 14

The change in total revenue resulting from the sale of an additional unit of a product.

Question 15

Break-Even Point

Answer 15

The point at which the costs of producing a product equal the revenue made from selling the product.

Question 16

Internal Reference Price

Answer 16

A price developed in the buyer’s mind through experience with the product.

Question 17

External Reference Price

Answer 17

A comparison price provided by others.

Question 18

Value Conscious

Answer 18

Concerned about price and quality of a product.

Question 19

Price Conscious

Answer 19

Striving to pay low prices.

Question 20

Prestige Sensitive

Answer 20

Drawn to products that signify prominence and status.

Question 21

Price Discrimination

Answer 21

Employing price differentials that injure competition by giving one or more buyers a competitive advantage.

Question 22

Trade (functional) Discount

Answer 22

A reduction off the list price a producer gives to an intermediary for performing certain functions.

Question 23

Quantity Discounts

Answer 23

Deductions from the list price for purchasing in large quantities.

Question 24

Cumulative Discounts

Answer 24

Quantity discounts aggregated over a stated time period.

Question 25

Noncumulative Discounts

Answer 25

One time price reductions based on the number of units purchased, the dollar value of the order, or the product mix purchased.

Question 26

Cash Discounts

Answer 26

Price reductions given to buyers for prompt payment or cash payment.

Question 27

Seasonal Discount

Answer 27

A price reduction given to buyers for purchasing goods or services out of season.

Question 28

Allowance

Answer 28

A concession in price to achieve a desired goal.

Question 29

Geographic Pricing

Answer 29

Reductions for transportation and other costs related to the physical distance between buyer and seller.

Question 30

F.O.B. Factory

Answer 30

The price of merchandise at the factory before shipment.

Question 31

F.O.B. Destination

Answer 31

A price indicating the producer is absorbing shipping costs.

Question 32

Uniform Geographic Pricing

Answer 32

Charging all customers the same price, regardless of geographic location.

Question 33

Zone Pricing

Answer 33

Pricing based on transportation costs within major geographic zones.

Question 34

Base-Point Pricing

Answer 34

Geographic pricing that combines factor price and freight charges from the base point nearest the buyer.

Question 35

Freight Absorption Pricing

Answer 35

Absorption of all parts of actual freight costs by the seller.

Question 36

Transfer Pricing

Answer 36

Prices charged in sales between an organization’s units.