question
As production moves up, the average cost per unit decreases because _______
answer
fixed costs are spread over more units
question
On a break-even chart, the break-even volume is located __________.
answer
at the intersection of total revenue and total costs
question
Which of the following statements is correct regarding different types of markets?
answer
Under oligopolistic competition each seller is alert and responsive to competitors' pricing strategies and marketing moves.
question
The simplest pricing method is ________ pricing.
answer
cost-plus
question
A downward-sloping experience curve is indicative of ________
answer
the falling unit production cost of a company
question
If demand hardly changes with a small change in price, the demand is ________
answer
inelastic
question
Which of the following is true regarding the pricedashdemand relationship?
answer
If demand is elastic, sellers will consider lowering their price.
question
Companies with lower costs ______
answer
can set lower prices that result in smaller margins but greater sales and profits
question
A company faces fixed costs of $100,000 and variable costs of $8 per unit. It plans to directly sell its product in the market for $12. How many units must it produce and sell to break even?
answer
25,000
question
What sets the floor for product prices?
answer
product costs
question
Which of the following exemplifies a pure competitive market
answer
a market where many buyers and sellers trade in a uniform commodity
question
Companies that adopt value-added pricing ________.
answer
attach value-added features and services to differentiate their offers and support their higher prices
question
Why is markup pricing most likely impractical?
answer
The method ignores demand and competitor prices.
question
How is price determined using cost-plus pricing?
answer
The price is set by adding a standard mark-up to the cost of the product.
question
The total production costs at Kellner Machine Works are $87,000 out of which $45,000 represent fixed costs. Which of the following is representative of the variable costs incurred by the company?
answer
$42,000
question
PoolPak produces climate-control systems for large swimming pools. The company's customers are more concerned about service support for maintaining their systems than the initial price of the product. PoolPak specializes in and differentiates itself through both cutting-edge technologies used to build its high-value climate control systems as well as seamless quality service. PoolPak's prices are very high, but demand for its climate-control systems seems to be forever on the rise. This exemplifies ________.
answer
a nonprice position
question
Which of the following shows the number of units the market will buy in a given time period, at different prices that might be charged?
answer
demand curve
question
Which of the following processes does value-based pricing reverse?
answer
cost-based pricing
question
What is target costing
answer
Setting a price and then setting costs that will ensure that the price is met
question
Price is the only part of the marketing mix that __________
answer
produces revenue
question
What sets the ceiling for product prices?
answer
customer perceptions of the product's value
question
A cell phone manufacturing firm produced 1,000 cell phones a day but believed that it could reasonably step up production to 2,000 cell phones a day. Consequently, it built a larger plant and installed efficient machinery and work arrangements to realize the projected output. Which of the following can most likely be inferred from this information?
answer
The unit cost of producing 2,000 cell phones per day would be lower than the unit cost of producing 1,000 units per day.
question
A pharmaceutical company in Utah recently released a new and expensive anti-ulcer drug in the market. The company justifies the high price of the drug by claiming that it is highly effective for treating all kinds of ulcers. The company also claims that the new drug will help bring down the need for invasive surgeries, an additional benefit for patients. Which of the following pricing strategies is the pharmaceutical company most likely using in this instance?
answer
value-based pricing
question
Price is important to managers _____
answer
because a small percentage improvement in price can generate a large percentage increase in profitability
question
Underpriced products ________
answer
produce less revenue than they would if they were priced at the level of perceived value
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