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The maximum quantity of products consumers will buy at given price is shown by


A) a demand curve.
B) a price constraint.
C) a break-even point.
D) a supply curve.
E) a marginal revenue curve.

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

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Calculate a firm's profit using the following information: the unit price (P) for a product is $40; the quantity sold (Q) is 2,000; the fixed cost (FC) is $50,000; and the variable cost (VC) is $20,000.


A) $10,000
B) $50,000
C) $110,000
D) $150,000
E) cannot be determined with the information provided

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

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Explain predatory pricing.

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Predatory pricing is the practice of cha...

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Using a price that is dictated by tradition, a standardized channel of distribution, or other competitive factors is referred to as


A) cost-plus pricing.
B) customary pricing.
C) standard markup pricing.
D) loss-leader pricing.
E) target profit pricing.

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

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A major grocery chain pays its baggers a regular hourly wage. The baggers not only pack the groceries, but they also will take customers' groceries to their car, regardless of the weather. The baggers are not permitted to accept tips, even if they are offered. The consumer will experience this shopping experience as


A) pricing enhancement.
B) societal pricing.
C) revenue sharing.
D) value-pricing.
E) cost-plus pricing.

F) None of the above
G) All of the above

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Barter is


A) a reciprocity agreement stipulating that if company A purchases services from company B, then company B must purchase similar services from company A.
B) a tying agreement stipulating that if company A purchases a product from company B, it must also purchase one of its services.
C) the practice of exchanging products and services for other products and services rather than for money.
D) the practice of exchanging services for products of equal or greater value.
E) the practice of exchanging products and services for money.

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

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Which of the following statements most likely would account for the shift in the demand curve from D1 to D2 shown in Figure 11-3b above?


A) The firm increased its prices and consumers perceived the value of the product to be greater.
B) There were fewer product substitutes available in the marketplace.
C) Competitors in the market raised their prices.
D) A recession occurred that raised consumers' incomes.
E) The firm's price remained the same but changes occurred in consumer tastes.

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

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Figure 11-3a -Figure 11-3a shows shows that when the quantity demanded for Red Baron frozen cheese pizzas moves from 2 to 3 million units along the demand curve D1, the profit A) increases from $6 to $8 per unit. B) decreases from $8 to $6 per unit. C) stays the same per unit. D) increases from $2 to $3 per unit. E) impacts cannot be determined. Figure 11-3a does not indicate what happens to profit when the quantity demanded changes. Figure 11-3a -Figure 11-3a shows shows that when the quantity demanded for Red Baron frozen cheese pizzas moves from 2 to 3 million units along the demand curve D1, the profit


A) increases from $6 to $8 per unit.
B) decreases from $8 to $6 per unit.
C) stays the same per unit.
D) increases from $2 to $3 per unit.
E) impacts cannot be determined. Figure 11-3a does not indicate what happens to profit when the quantity demanded changes.

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

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What are two special adjustments to the list or quoted price?

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Two special adjustments to the...

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


A) loss-leader pricing
B) standard markup pricing
C) at-, above-, or below-market pricing
D) price lining
E) penetration pricing

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

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Forever Quilting is a small company that makes quilting kits priced at $120 each. There is no quantity discount. The costs of the materials that go into each kit total $45. It costs $5 in labor to assemble a kit. The company has monthly expenses of $1,000 for rent and insurance, $200 for heat and electricity, $500 for advertising, and $4,500 for the monthly salary of its owner. Last month the company sold 150 kits. Forever Quilting's total revenue for the month was


A) $4,300.
B) $6,200.
C) $7,500.
D) $10,500.
E) $18,000.

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

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Unit variable cost refers to variable cost expressed


A) as the sum of all units sold.
B) on a per unit basis for a product.
C) as a percentage of total sales.
D) as a percentage of fixed costs.
E) as a percentage of total costs.

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

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Variable cost is


A) the sum of the expenses of the firm that are stable and do not change with the quantity of a product that is produced and sold.
B) the sum of the expenses of the firm that change with the quantity of a product that is produced and sold.
C) the total expense incurred by a firm in producing and marketing a product, which equals the sum of fixed cost and marginal cost.
D) the average amount of money received for selling one unit of a product or simply the price of that unit.
E) the change in total cost that results from producing and marketing one additional unit of a product.

F) A) and E)
G) None of the above

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Penetration pricing is intended to appeal to which market?


A) highly selective, quality-seeking consumers
B) price-insensitive markets
C) specialty product markets
D) the same markets as those targeted with a skimming pricing strategy
E) the mass market

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

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When the Swiss watchmaker TAG Heuer quadrupled the average price of its watches, its sales volume jumped sevenfold. The likely cause of this volume increase is


A) because the watch market is highly conservative.
B) because economies of scale in production would be substantial.
C) because retailers are not willing to carry new brands of watches in this category.
D) because once the initial price is set, it is nearly impossible to lower the price without alienating early buyers.
E) because the watch category frequently uses prestige pricing, wherein lower prices may result in lower sales.

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

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A company that manages apartments decides to buy 15 new dishwashers at a list price of $550 each as replacements for old dishwashers in a small apartment complex it owns. Because the company is buying more than 10 dishwashers, it is eligible for a $150-per-unit quantity discount. Financing charges total $20 per unit. The company gets $10 per dishwasher for the 15 dishwashers traded in. What is the final price the company will pay for each dishwasher?


A) $390
B) $400
C) $410
D) $430
E) $730

F) A) and B)
G) A) and C)

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What is loss-leader pricing and why do retailers use it?

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For a special promotion, many retail sto...

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Several factors indicate that a penetration pricing policy would most likely be effective when introducing a new product, including situations in which


A) lowering the price has only a minor effect on increasing the sales volume and reducing the unit cost.
B) the high initial price will not attract competitors.
C) customers interpret the high price as signifying high quality.
D) enough prospective customers are willing to buy immediately at the high initial price to make these sales profitable.
E) many segments of the market are price-sensitive.

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

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If a McDonald's menu board advertises Mini Meals under $3, McDonald's is most likely using which type of pricing strategy?


A) predatory pricing
B) value-pricing
C) loss-leader pricing
D) odd-even pricing
E) barter

F) D) and E)
G) All of the above

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A one-price policy refers to


A) setting different prices for products and services in real time in response to supply and demand conditions.
B) setting the price of an entire line of products at a single specific pricing point.
C) simultaneously setting prices for all items in a product line to cover the total cost and produce a profit for the complete line, not necessarily for each item.
D) adding a fixed percentage to the cost of all items in a specific product class.
E) setting one price for all buyers of a product or service.

F) A) and D)
G) All of the above

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