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Exam 12: Pricing Products and Services

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Question 171

Multiple Choice

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A technique that analyzes the relationship between total revenue and total cost to determine profitability at various levels of output is referred to as _________.

A) break-even analysis
B) marginal analysis
C) sensitivity analysis
D) market analysis
E) productivity analysis

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

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Question 172

Multiple Choice

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Which of the following statements is most accurate?

A) For some products, price influences the perception of overall quality, and ultimately value, to consumers.
B) A consumer's view of a product's value is always tied to quality.
C) A consumer's view of value is a function of their education and upbringing.
D) Price plays only a small part in a consumer's value of a product or service.
E) Price plays a large role in assessing value but plays a very minor role in assessing quality.

F) A) and B)
G) B) and D)

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Question 173

Multiple Choice

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At a price of $3 each, SH $\Lambda$ PE magazine sells 1.25 million copies of its magazine targeted to young women seeking a healthier lifestyle.If the price per issue is increased to $3.25 each, only 1 million copies will be sold.Fixed costs are $1 million and unit variable costs are $0.50 per magazine.For the information provided here, what is SH $\Lambda$ PE magazine's total revenue obtained at the lower price?

Break-even analysis refers to

To increase value marketers may _________, decrease price, or both increase benefits and decrease price.

The Sherman Act, the Consumer Goods Pricing Act, the Robinson-Patman Act, and the Federal Trade Commission Act all address different aspects of deceptive pricing.Select one example for each act and explain which aspects of the practice would be considered illegal.

To calculate _________, you would compute: (Perceived benefits / Price) .

Which of the following is a profit-oriented pricing method?

The price a buyer pays can take different names, depending on what is purchased, and can change depending on _________.

Functional discounts are offered to resellers in the marketing channel on the basis of where they are in the channel and

Which of the following is a cost-oriented pricing method?

Unit volume as a pricing objective refers to

Washburn recently purchased Parker Guitar, another guitar manufacturer that designed products for professionals and collectors, and will combine the two production facilities into a new location.Washburn expects the acquisition to reduce its rent and tax expenses by 40 percent, and the new skilled employees will reduce the hours of work needed for each unit by 15 percent.This would cause the slope of the total cost curve to _________ and the break-even quantity to _________.

Vizio, Inc.is an up and coming contender in the __________ market.

Jane Westerlund owns a picture-framing shop, The Caplow Co.The average price she receives for a picture she frames for a customer is $120.This price must cover her average costs for a typical framed picture of $5 for glass, $2 for matting, and $13 for the frame, and $30 for the labor involved.She must also cover monthly expenses of $1,000 for rent and insurance, $200 for heat and electricity, $500 for advertising, and $3,500 for her salary.Westerlund is considering buying an automatic mat-cutting machine in order to reduce the number of hours of direct labor required to produce a framed picture.In considering this purchase, she should recognize this purchase will __________ Caplow's variable cost and __________ Caplow's fixed cost.

Target return-on-investment (ROI) is frequently used by

Step 1 of the pricing process is identifying pricing objectives and constraints.Describe the reasons these objectives may change and give examples of objectives a firm may set.

A Swedish company such as Asko that prides itself on manufacturing and marketing some of the best-built and most expensive appliances in the world is using which competition-oriented method of pricing?

Like discounts, reductions from list or quoted prices to buyers for performing some activity are referred to as

Ace Shoe Company sells heel replacement kits for men's shoes.It has fixed costs of $6 million and unit variable costs of $5 per pair.Suppose a consultant tells Ace it can sell 750,000 heel repair kits, what price must it charge to achieve a profit of $2.5 million?