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Which of the following statements is true of geographic pricing?


A) Freight absorption pricing is a tactic that requires a buyer to absorb the freight costs from the shipping point.
B) Uniform delivered pricing divides the United States into segments or zones and charges a flat freight rate to all customers in a given zone.
C) Postage stamp pricing is adopted when the marketing manager wants total costs to be equal for all purchasers of identical products.
D) With basing-point pricing, a seller designates a location as a basing point so that all buyers are not charged the freight cost from that point.

E) All of the above
F) A) and B)

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Which of the following statements is true of yield management systems?


A) They determine the availability of product substitutes in industries that are experiencing rapid change.
B) They use software that employs techniques such as discounting early purchases and limiting early sales at these discounted prices.
C) They predict necessary service levels required to achieve revenue goals.
D) They determine whether it is financially more feasible to buy a new product or to repair a broken one.

E) B) and C)
F) All of the above

Correct Answer

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Extranets enable buyers to quickly and easily compare products and prices, putting them in a better bargaining position.

A) True
B) False

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Explain with examples how price plays a role in promotion strategies for products.

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Answers will vary. Price is often used a...

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Which of the following is a limitation of break-even analysis?


A) It does not give an estimate of how much profit can be earned once the break-even point is obtained.
B) It does not give weightage to the cost of labor that is incurred during production.
C) Sometimes it cannot predict the effect of changes in sales price.
D) Sometimes it is hard to know whether a cost is fixed or variable.

E) None of the above
F) All of the above

Correct Answer

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Which of the following statements is true of simple break-even analysis?


A) It does not consider the selling price of a product.
B) It does not give weightage to the cost of labor.
C) It is applicable only when the demand for a product is elastic.
D) It ignores the demand for a product.

E) A) and B)
F) B) and D)

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_____ is a pricing policy whereby a firm charges a relatively low price for a product when it is first rolled out as a way to reach the mass market.


A) Penetration pricing
B) Price skimming
C) Price discrimination
D) Status quo pricing

E) A) and B)
F) C) and D)

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Yield management systems encourage airline companies to ignore the importance of demand and decide to price their products largely or solely on the basis of costs.

A) True
B) False

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Explain the significance of market share as a sales-oriented pricing objective.

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Answers will vary. Market share is a com...

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Which of the following statements is true of unfair trade practice acts?


A) They prohibit any firm from selling to two or more different buyers.
B) Unfair trade practice laws prevent oligopoly leaders from joining together and fixing prices at the highest rates that a market will allow.
C) They establish penalties for companies that engage in predatory pricing.
D) State enforcement of unfair trade practice laws has been lax partly because low prices benefit local consumers.

E) None of the above
F) B) and C)

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A cost that changes with the level of output is called a(n) _____.


A) liquid cost
B) variable cost
C) independent cost
D) indirect cost

E) B) and D)
F) C) and D)

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To increase the popularity of its new range of smartphones, GizmoPro Inc., a mobile phone manufacturer, offered several accessories for free to customers who bought the smartphones. However, the management of GizmoPro Inc. soon found this an unsustainable practice. The company then decided to offer discounts on the accessories instead of giving them for free. These actions of the management of GizmoPro Inc. are aimed at _____.


A) market share pricing
B) profit maximization
C) demand orientation
D) sales maximization

E) None of the above
F) C) and D)

Correct Answer

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Profit-oriented pricing objectives include _____.


A) target return on investment
B) target market share
C) meeting competitors' prices
D) status quo pricing

E) A) and D)
F) A) and C)

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Unlike a firm that strives for market share, a firm with the objective of maximizing sales:


A) possesses adequate funds and faces an optimistic future.
B) ignores profits, competition, and the marketing environment as long as sales are rising.
C) benefits from maximization of cash if it is adopted as a long-run objective.
D) seeks to maintain existing prices or to meet the competition's prices.

E) B) and D)
F) A) and D)

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_____ is the quantity of a product that will be offered to the market by a supplier at various prices for a specified period.


A) Demand
B) Supply
C) Market share
D) Product share

E) C) and D)
F) B) and C)

Correct Answer

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Which of the following statements is true of shopping bots?


A) The broad-based type of shopping bot searches for prices for only one type of product.
B) They create opportunities for prestige pricing.
C) They theoretically give pricing power to a consumer.
D) The niche-oriented shopping bot searches a wide range of product categories.

E) A) and B)
F) A) and D)

Correct Answer

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The managers at Click-to-Door, an e-commerce website, closely monitor its rival online retailers to analyze how consumers respond to changes in the prices of certain products. They use the results of this analysis to constantly change the prices on their website to maximize sales and profits. In this case, which of the following pricing strategies does Click-to-Door follow?


A) Comparative pricing
B) Dynamic pricing
C) Capacitive pricing
D) Dependent pricing

E) B) and D)
F) None of the above

Correct Answer

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Discuss the role of price in the evaluation of product alternatives.

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Answers will vary. Price is that which i...

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Betty, a teenager, starts a business selling cupcakes to coffee shops and restaurants. She strives to increase either the market share in terms of the revenue generated. This illustrates the _____ objective.


A) status quo pricing
B) profit-oriented pricing
C) bait pricing
D) sales-oriented pricing

E) A) and B)
F) B) and C)

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To prove predatory pricing, the predator must show that it explicitly tried to ruin a competitor and that the predatory price was below its average variable cost.

A) True
B) False

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