Question 1

Which of the following is NOT a factor retailers consider in setting prices?

Accepted Answer

A)  price sensitivity of consumers
B)  the cost of the merchandise and services
C)  competition
D)  legal restrictions
E)  language barriersF) A) and B)
G) B) and C)

Question 2

A retailer selling products at a price lower than their competitor for the purpose of causing their competitor to go out of business is called ___________.

Accepted Answer

A)  horizontal price fixing
B)  vertical price fixing
C)  MSRP pricing
D)  predatory pricing
E)  price elasticityF) B) and C)
G) C) and E)

Question 3

Jenny runs a neighborhood produce stand in an inner-city neighborhood.With the recent layoffs,she has become popular because she gives her day-old produce to the local charity for struggling members of her community.Obviously,she takes a loss,but what is the benefit from this act of altruism?

Accepted Answer

A)  She frequently has homeless members of her community asking for personalized assistance.
B)  News of her philanthropic ways spreads to neighboring communities bringing in new shoppers who want to patronize her store.
C)  Because of the service to the community,the IRS looks the other way as her write-offs surpass what is acceptable for deductions.
D)  The produce isn't put in the trash which may attract wild animals.
E)  The charity gives her a kickback.F) A) and B)
G) B) and E)

Question 4

Ferdinand ran a pie shop in a busy metropolis.He sold his fresh pies for $7,but it cost him $2.50 to make them.The cooking equipment in his shop cost him $46,000.How many pies does Ferdinand need to sell to make $50,000 annually?

Accepted Answer

A)  33,000 pies
B)  16,000 pies
C)  8,500 pies
D)  21,333 pies
E)  12,645 piesF) B) and E)
G) A) and E)

Question 5

Anne Marie made an effort to stop into the Walgreen's on her way home from work each Friday to pick up a gallon of milk since it was priced cheaper than her local grocery store.In this case,the milk is an example of Walgreens' use of ________.

Accepted Answer

A)  stimulus pricing
B)  leader pricing
C)  follow-up pricing
D)  price lining
E)  odd pricingF) None of the above
G) C) and E)

Question 6

Generally,as the price of a product increases,sales for the product will increase.

Accepted Answer

A) True 
 B)False

Question 7

Retailers need to set their prices high enough so that __________.

Accepted Answer

A)  after markdowns,the retailer can still achieve their profit goals
B)  merchandise looks attractive to shoppers
C)  a variety of vendors cater to the retailer
D)  a value is given to the merchandise because of the price
E)  they just cover their costsF) C) and D)
G) B) and E)

Question 8

Which of the following is the LEAST profitable method of liquidating markdown merchandise?

Accepted Answer

A)  Sell the merchandise to another retailer.
B)  Consolidate the unsold merchandise.
C)  Place the remaining merchandise on an Internet auction site.
D)  Give the merchandise to charity.
E)  Carry the merchandise over to the next season.F) C) and D)
G) A) and E)

Question 9

Best Buy originally priced a private-label portable DVD player at $99,then sold 1,200 units per week.After raising the price to $120,sales dropped to 1,000 units per week.What would the item's price elasticity be?

Accepted Answer

A)  -2.4005
B)  2.4005
C)  -3
D)  3.33
E)  -.7855F) B) and C)
G) D) and E)

Question 10

A drugstore purchases hand cream at $2 per jar and sells them for $15.What is their markup percentage?

Accepted Answer

A)  60%
B)  87%
C)  40%
D)  5%
E)  22%F) A) and B)
G) A) and C)

Question 11

The practice of offering the same multiple price schedule to all customers but require that customers do something to get the lower price-something that discourages customers with a high willingness to pay to take advantage of the lower price is referred to as _________.

Accepted Answer

A)  first-degree price discrimination
B)  second-degree price discrimination
C)  third-degree price discrimination
D)  price lining
E)  high/low pricingF) D) and E)
G) A) and E)

Question 12

What are the limits of the rule-based approach of taking markdowns?

Accepted Answer

The rule-based approach of taking markdo...

Question 13

Which of the following items has the most price elasticity?

Accepted Answer

A)  McDonald's sandwich meals
B)  Tiffany jewelry
C)  prescription medication
D)  Ethan Allen sofa
E)  gasolineF) A) and C)
G) A) and D)

Question 14

An appliance store wants to get customers who are buying an upright freezer to trade up to the more expensive self-defrosting model with a special section for ice cream.Which of the following practices can be used by the store to achieve this goal?

Accepted Answer

A)  price lining
B)  price bundling
C)  odd pricing
D)  horizontal price fixing
E)  leader pricingF) C) and D)
G) B) and C)

Question 15

Although many may initially disagree,why is Walmart legally not guilty of predatory pricing?

Accepted Answer

A retailer can sell merchandise at any p...

Question 16

The retail price of a sweater is $75 and the initial markup is 51 percent.Calculate the cost of the product.

Accepted Answer

A)  $33.75
B)  $25.71
C)  $28.50
D)  $36.75
E)  $42.85F) A) and E)
G) A) and D)

Question 17

Which of the following statements describes situations in which markdowns would NOT be appropriate?

Accepted Answer

A)  Markdowns would be appropriate on a pair of pillows that had been part of a display and were showing light wear.
B)  Markdowns would be an appropriate pricing strategy for winter parkas that are still in stock in March.
C)  Markdowns would be appropriate for licensed merchandise supporting a movie that was not as popular as predicted.
D)  Markdowns would be appropriate for national brand merchandise that was priced 15 percent lower in a neighboring competing store.
E)  Markdowns would be appropriate for a group of t-shirts that have a higher turnover than other t-shirts in the department.F) B) and E)
G) A) and E)

Question 18

Mattie owns a clock shop featuring vintage clocks from the 1950's.Mattie plans to achieve a 40% maintained mark-up and her reductions are planned at 4%.What is her planned initial markup percentage?

Accepted Answer

A)  42.3%
B)  44%
C)  36%
D)  34.6%%
E)  30.6%F) B) and D)
G) A) and C)

Question 19

A variable cost refers to the retailer's expenses that vary directly with the quantity of product produced and sold.

Accepted Answer

A) True 
 B)False

Question 20

Predatory pricing is when a retailer sets prices below its costs to drive competitive retailers out of business and then raises the prices once there is no longer competition.

Accepted Answer

A) True 
 B)False

Exam 14: Retail Pricing

Retailers need to set their prices high enough so that __________.

Correct AnswerverifiedShow Answer

Which of the following is NOT a factor retailers consider in setting prices?

Correct AnswerverifiedShow Answer

Anne Marie made an effort to stop into the Walgreen's on her way home from work each Friday to pick up a gallon of milk since it was priced cheaper than her local grocery store.In this case,the milk is an example of Walgreens' use of ________.

Correct AnswerverifiedShow Answer

A retailer selling products at a price lower than their competitor for the purpose of causing their competitor to go out of business is called ___________.

Correct AnswerverifiedShow Answer

Generally,as the price of a product increases,sales for the product will increase.

Correct AnswerverifiedShow Answer

Jenny runs a neighborhood produce stand in an inner-city neighborhood.With the recent layoffs,she has become popular because she gives her day-old produce to the local charity for struggling members of her community.Obviously,she takes a loss,but what is the benefit from this act of altruism?

Correct AnswerverifiedShow Answer

Which of the following statements describes situations in which markdowns would NOT be appropriate?

Correct AnswerverifiedShow Answer

Which of the following items has the most price elasticity?

Correct AnswerverifiedShow Answer

What are the limits of the rule-based approach of taking markdowns?

Correct AnswerverifiedThe rule-based approach of taking markdo...View AnswerShow Answer

Which of the following is the LEAST profitable method of liquidating markdown merchandise?

Correct AnswerverifiedShow Answer

Predatory pricing is when a retailer sets prices below its costs to drive competitive retailers out of business and then raises the prices once there is no longer competition.

Correct AnswerverifiedShow Answer

Although many may initially disagree,why is Walmart legally not guilty of predatory pricing?

Correct AnswerverifiedA retailer can sell merchandise at any p...View AnswerShow Answer

A variable cost refers to the retailer's expenses that vary directly with the quantity of product produced and sold.

Correct AnswerverifiedShow Answer

The retail price of a sweater is $75 and the initial markup is 51 percent.Calculate the cost of the product.

Correct AnswerverifiedShow Answer

A drugstore purchases hand cream at $2 per jar and sells them for $15.What is their markup percentage?

Correct AnswerverifiedShow Answer

An appliance store wants to get customers who are buying an upright freezer to trade up to the more expensive self-defrosting model with a special section for ice cream.Which of the following practices can be used by the store to achieve this goal?

Correct AnswerverifiedShow Answer

Mattie owns a clock shop featuring vintage clocks from the 1950's.Mattie plans to achieve a 40% maintained mark-up and her reductions are planned at 4%.What is her planned initial markup percentage?

Correct AnswerverifiedShow Answer

Best Buy originally priced a private-label portable DVD player at $99,then sold 1,200 units per week.After raising the price to $120,sales dropped to 1,000 units per week.What would the item's price elasticity be?

Correct AnswerverifiedShow Answer

Ferdinand ran a pie shop in a busy metropolis.He sold his fresh pies for $7,but it cost him $2.50 to make them.The cooking equipment in his shop cost him $46,000.How many pies does Ferdinand need to sell to make $50,000 annually?

Correct AnswerverifiedShow Answer

The practice of offering the same multiple price schedule to all customers but require that customers do something to get the lower price-something that discourages customers with a high willingness to pay to take advantage of the lower price is referred to as _________.

Correct AnswerverifiedShow Answer

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The rule-based approach of taking markdo...
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A retailer can sell merchandise at any p...
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