Question 1

Price elasticity of demand is represented by ________ divided by ________.

Accepted Answer

A)   percentage change in quantity demanded; percent change in price
B)   percentage change in units supplied; percentage change in price
C)   percentage change in price; percentage change in quantity demanded
D)   fixed costs; variable costs
E)   cost-plus price; actual cost of production

Question 2

Cost-based pricing is often product driven.

Accepted Answer

A) True 
 B)False

Question 3

Overhead costs are costs that do not vary with production or sales level.

Accepted Answer

A) True 
 B)False

Question 4

Companies with lower costs ________.

Accepted Answer

A)   specialize in selling products with value-added features
B)   usually market products with inferior quality, thereby justifying the low selling price
C)   can set lower prices that result in smaller margins but greater sales and profits
D)   tend to overprice products owing to their monopolistic advantage
E)   usually set higher prices that result in higher margins

Question 5

In industries in which pricing is a key factor, ________ often set the best prices or help others in setting them.

Accepted Answer

A)   sales departments
B)   salespeople
C)   production managers
D)   line managers
E)   pricing departments

Question 6

Fixed costs ________.

Accepted Answer

A)   are costs that do not vary with production or sales level
B)   vary directly with the level of production
C)   decrease with accumulated production experience
D)   are the sum of the overhead and variable costs for any given level of production
E)   represent the annual costs of inputs incurred by a company

Question 7

Which of the following is true of a pure competitive market?

Accepted Answer

A)   A single seller has a major effect on the current and future market price.
B)   Companies spend significantly on marketing research and product development.
C)   The advertising budget of companies is usually huge.
D)   Sellers try to develop differentiated offers for different customer segments.
E)   Sellers spend little time on marketing strategy.

Question 8

Effective ________ pricing involves understanding how much value consumers place on the benefits they receive from the product and setting a price that captures that value.

Accepted Answer

A)   customer-oriented
B)   cost-based
C)   time-based
D)   competition-oriented
E)   marketer-oriented

Question 9

If a company faces competition, its demand at different prices will depend on whether competitors' prices stay constant or change with the company's own prices.

Accepted Answer

A) True 
 B)False

Question 10

When the price of a pack of Crispo potato wafers was increased from $4 to $5, the quantity demanded by local retail stores went down by 50%. Hence, the price elasticity of demand for Crispo is ________.

Accepted Answer

A)   -2
B)   2
C)   4
D)   -4
E)   0.5

Question 11

Bruno Servers has decided to decrease its prices on its popular higher-range servers. The company can reasonably expect ________ to increase.

Accepted Answer

A)   fixed costs
B)   variable costs
C)   demand
D)   additional value
E)   overhead costs

Question 12

________ refers to a measure of the sensitivity of demand to changes in price.

Accepted Answer

A)   Price elasticity
B)   Cross-elasticity of demand
C)   Elasticity of substitution
D)   Marginal utility
E)   Income elasticity of demand

Question 13

If demand changes greatly with price, the demand is inelastic.

Accepted Answer

A) True 
 B)False

Question 14

The fixed cost in manufacturing a single LED monitor is $40 and the variable cost is $12. If the company expects to manufacture 5,000 monitors, the total costs would be ________.

Accepted Answer

A)   $60,000
B)   $200,000
C)   $260,000
D)   $420,000
E)   $500,000

Question 15

If demand changes greatly with a small change in price, the demand is ________.

Accepted Answer

A)   variable
B)   inelastic
C)   derived
D)   elastic
E)   negative

Question 16

What is a demand curve? Explain its importance in the context of pricing decisions.

Accepted Answer

A demand curve shows the number of units...

Question 17

________, the more it pays for the seller to raise the price.

Accepted Answer

A)   The less inelastic the demand
B)   The less elastic the demand
C)   The less the quality of tied services
D)   The more the sensitivity toward small price changes
E)   The more intense the competition

Question 18

The simplest pricing method is cost-plus pricing, which involves adding a standard markup to the cost of the product.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following involves setting prices based on a rival firm's strategies, costs, prices, and market offerings?

Accepted Answer

A)   target return pricing
B)   good-value pricing
C)   competitor value-added pricing
D)   market-based pricing
E)   competition-based pricing

Question 20

A company must pay each month's bills for rent, heat, interest, and executive salaries regardless of the company's level of output. This exemplifies its ________ costs.

Accepted Answer

A)   overhead
B)   variable
C)   target
D)   total
E)   unit

Exam 10: Pricing: Understanding and Capturing Customer Value

In industries in which pricing is a key factor, ________ often set the best prices or help others in setting them.

Correct AnswerverifiedShow Answer

Cost-based pricing is often product driven.

Correct AnswerverifiedShow Answer

Which of the following involves setting prices based on a rival firm's strategies, costs, prices, and market offerings?

Correct AnswerverifiedShow Answer

A company must pay each month's bills for rent, heat, interest, and executive salaries regardless of the company's level of output. This exemplifies its ________ costs.

Correct AnswerverifiedShow Answer

If demand changes greatly with price, the demand is inelastic.

Correct AnswerverifiedShow Answer

When the price of a pack of Crispo potato wafers was increased from $4 to $5, the quantity demanded by local retail stores went down by 50%. Hence, the price elasticity of demand for Crispo is ________.

Correct AnswerverifiedShow Answer

Price elasticity of demand is represented by ________ divided by ________.

Correct AnswerverifiedShow Answer

Fixed costs ________.

Correct AnswerverifiedShow Answer

Effective ________ pricing involves understanding how much value consumers place on the benefits they receive from the product and setting a price that captures that value.

Correct AnswerverifiedShow Answer

Companies with lower costs ________.

Correct AnswerverifiedShow Answer

Overhead costs are costs that do not vary with production or sales level.

Correct AnswerverifiedShow Answer

The simplest pricing method is cost-plus pricing, which involves adding a standard markup to the cost of the product.

Correct AnswerverifiedShow Answer

The fixed cost in manufacturing a single LED monitor is $40 and the variable cost is $12. If the company expects to manufacture 5,000 monitors, the total costs would be ________.

Correct AnswerverifiedShow Answer

What is a demand curve? Explain its importance in the context of pricing decisions.

Correct AnswerverifiedA demand curve shows the number of units...View AnswerShow Answer

Bruno Servers has decided to decrease its prices on its popular higher-range servers. The company can reasonably expect ________ to increase.

Correct AnswerverifiedShow Answer

If a company faces competition, its demand at different prices will depend on whether competitors' prices stay constant or change with the company's own prices.

Correct AnswerverifiedShow Answer

If demand changes greatly with a small change in price, the demand is ________.

Correct AnswerverifiedShow Answer

________, the more it pays for the seller to raise the price.

Correct AnswerverifiedShow Answer

________ refers to a measure of the sensitivity of demand to changes in price.

Correct AnswerverifiedShow Answer

Which of the following is true of a pure competitive market?

Correct AnswerverifiedShow Answer

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Price elasticity of demand is represented by divided by .

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A demand curve shows the number of units...
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