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Exam 13: Building the Price Foundation

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Question 151

Multiple Choice

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The competitive market situation in which the few sellers are sensitive to each other's prices is referred to as

A) pure monopoly.
B) oligopoly.
C) monopolistic competition.
D) pure competition.
E) oligopolistic competition.

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

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Question 152

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A negative aspect of selecting unit volume as a pricing objective is that

A) production often can not keep up with demand.
B) there are increased carrying costs with extensive inventories.
C) if price reductions are used to achieve volume objectives,it can sometimes come at the expense of profits.
D) it can create competition between divisions within the organization itself causing conflicts over the allocation of resources.
E) it always positively correlates with a sales revenue objective.

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

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Question 153

Multiple Choice

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Total revenue refers to

A primary reason for Washburn's success is

The change in total cost that results from producing and marketing one additional unit of product is referred to as

Figure 13-2 above represents the six steps in the price-setting process."A" represents the step at which a firm would

Many cosmetology schools allow their advanced students to style hair for "real world" clients for a reduced fee.The students benefit from the experience,the clients get a less expensive haircut,and the school is able to provide students with additional training without costing it anything;in fact,they even profit from it.This is an example of

Price elasticity of demand is determined by a number of factors,such as the necessity of the product or service,the cash outlay of the purchase relative to a person's disposable income,and

All of the following are demand factors EXCEPT:

A break-even chart refers to a graphic presentation

In Figure 13-4 above,column "C" represents which type of competitive market?

Which of the following represent elements of Step 2 of the price-setting process?

Figure 13-2 above represents the six steps in setting price."B" represents the step at which a firm would

Which of the following statements regarding pricing constraints is MOST ACCURATE?

Jane Westerlund owns a picture-framing store,The Caplow Co.The average price she receives for a framed picture is $120.This price must cover her costs for a typical framed picture,which consists of $5 for glass,$2 for matting,$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 matte-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 that this purchase will __________ Caplow's variable cost and __________ Caplow's fixed cost.

Which of the following statements regarding sales goals is MOST ACCURATE?

Acme Shoe Company sells heel replacement kits for men's shoes.It has fixed costs of $9 million and unit variable costs of $5 per pair.Acme is considering a switch from manual labor to an automated process.New equipment would cost an additional $4 million per year while lowering variable costs by $3 per shoe repair kit.How many kits would Acme have to sell at $17 per pair to make $2 million in profits in the next year with the automated process?

Which of the following statements regarding the seller's price is MOST ACCURATE?

Three different objectives relate to a firm's profit,which is often measured in terms of return on investment.One objective,known as _________,is common in many firms because the targets can be set and performance measured quickly.

The American Eagle Outfitters in-store signage photo above shows that customers can buy an American Eagle Outfitters hoodie for $24.95 and then purchase another one for 50 percent off (BOGO Deal "A") .Another BOGO deal (not shown above) offers consumers a markdown of 10 percent if they buy two hoodies (BOGO Deal "B") .In a third BOGO deal (not shown above) ,a retailer has marked down the price of hoodies from $24.95 to $22.95 per hoodie,so you'll consider buying two at that price (BOGO Deal "C") .BOGO deal #4 (not shown above) offers consumers the following terms: 5 percent off the first item and then 10 percent off the reduced price for the second item (BOGO Deal "D") .Finally,a fifth BOGO deal offers consumers the following terms: $10 off of all purchases of $40 or more (BOGO Deal "E") .Which BOGO deal offers the best value (least cost) to consumers for the purchase of American Eagle Outfitters hoodies?