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Exam 19: Pricing Concepts

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Question 31

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Which statement is true of the relationship of price to quality?

A) When a purchase decision involves uncertainty,consumers tend to attribute higher quality to low-priced products.
B) Consumers perception that a higher price indicates higher quality seems to vary from one product to another.
C) In the absence of other information,people typically assume that if prices are higher,that rarely indicates higher quality.
D) Price promotions of higher priced,higher quality brands tend to attract more business than do similar promotions of lower priced and lower quality brands.

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

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Question 32

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Unlike break-even pricing,markup pricing uses complicated concepts of cost.

A) True
B) False

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Question 33

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Because of its recent high growth in the national market,Mable Inc.,an online cosmetics retailer,has divided its U.S.market into segments and is charging a flat freight rate to all customers in a given segment.In this scenario,Mable Inc.plans to adopt freight absorption pricing.

Extranets enable buyers to quickly and easily compare products and prices,putting them in a better bargaining position.

Discuss the role of price in promotion strategies for products.

Which of the following best defines markup pricing?

As products enter the growth stage of the product life cycle,prices generally begin to stabilize.

Which action would a firm take if following a status quo pricing policy?

The newly opened Stone Restaurant was unable to attract a lot of customers.Because the restaurant's owner had to pay back the loan that he had taken to start the restaurant,he decided to offer a 20 percent discount on the entire menu on weekends.In this scenario,the owner's pricing objective is to maximize _____.

As the product enters the maturity stage,prices generally begin to stabilize.

When Lofonift Inc.introduced its flagship MP3 player,it captured the market by offering the product at a very low price.This gradually forced many of its competitors out of business.Once its competitors were out of business,Lofonift Inc.raised the price.In this scenario,Lofonift Inc.most likely indulged in _____.

Which term refers to a deduction from list price applied to a customer's total purchases made during a specific period?

For convenience,pricing objectives can be divided into three categories: profit oriented,sales oriented,and ______.

Which of the following defines demand?

Product life cycles can only be measured in years.

A situation in which consumer response is sensitive to changes in price exhibits ______ demand.

To prove predatory pricing,it must be proved that the destructive company explicitly tried to ruin a competitor and that the predatory price was below the predator's average variable cost.

Betty's Bakery sells cupcakes to coffee shops and restaurants.The company strives to increase its market share in terms of the revenue generated.This illustrates the _____ pricing objective.

Define elasticity of demand and discuss the factors that affect elasticity.

When using _____,the seller pays all or part of the actual shipment charges and does not pass them on to the buyer.