126) Before deciding to use credit as a competitive weapon, small business owners must make
sure that the firm’s cash position is strong enough to support additional pressure.
Topic: The Impact of Credit on Pricing, Trade Credit
AACSB: Reflective Thinking
127) Today’s business environment requires firms to separate their pricing strategy with their
credit strategy.
Topic: The Impact of Credit on Pricing
AACSB: Analytic Skills
128) Fixed expenses fluctuate according to production levels.
Topic: Direct Costing and Pricing
AACSB: Analytic Skills
129) For manufacturers, the pricing decision requires the support of accurate sales records.
Topic: Pricing Techniques for Manufacturers
AACSB: Analytic Skills
130) When developing a marketing approach to pricing, business owners must establish prices
that are compatible with what their customers expect and are willing to pay.
Topic: Price Conveys Image
AACSB: Analytic Skills
131) When setting prices, business owners should automatically match or beat the competitors.
Topic: Competition and Prices
AACSB: Analytic Skills
132) Two factors are vital to studying the effects of competition on a small firm’s pricing
policies: the location of the competitors and the nature of the competing goods.
Topic: Competition and Prices
AACSB: Analytic Skills
27
133) The nature of competitors’ goods does not influence the small firm’s pricing policies.
Topic: Competition and Prices
AACSB: Analytic Skills
134) In general, entrepreneurs should avoid head-to-head price competition with other firms that
can more easily achieve lower prices through lower cost structures.
Topic: Competition and Prices
AACSB: Analytic Skills
135) Price wars can eradicate companies’ profit margins and scar an entire industry for years.
Topic: Competition and Prices
AACSB: Analytic Skills
136) Penetration refers to if a business introduces a product into a highly competitive market in
which a large number of similar products are competing for acceptance.
Topic: Pricing Strategies and Tactics
AACSB: Analytic Skills
137) In cases in which development costs are extremely high, as in new high technology
products, the skimming technique helps the firm recoup its research and development costs in a
shorter time span.
Topic: Pricing Strategies and Tactics, Skimming
AACSB: Analytic Skills
138) Geographic pricing is a technique that greatly simplifies the pricing function.
Topic: Pricing Techniques for Established Products and Services, Geographic Pricing
AACSB: Analytic Skills
139) A seasonal discount is a price reduction designed to encourage shoppers to purchase
merchandise before an upcoming season.
Topic: Pricing Techniques for Established Products and Services, Discounts
AACSB: Analytic Skills
28
140) Captive-product pricing is when the base product is not functional without the appropriate
accessory.
Topic: Pricing Techniques for Established Products and Services, Captive-Product Pricing
AACSB: Analytic Skills
141) Define and explain the terms: price, price range, price ceiling, and price floor. Why is it
important to keep these terms distinct in the entrepreneur’s thinking?
Topic: Introduction
AACSB: Analytic Skills
142) Name and explain the three basic pricing strategies a small business owner has in
establishing a new product’s price.
Topic: Pricing Strategies and Tactics
AACSB: Analytic Skills
143) There are at least eight different pricing strategies for established goods and services.
Explain four of those strategies and why you’d use them.
Topic: Pricing Techniques for Established Products and Services
AACSB: Analytic Skills
29
144) How does price convey an image for the product or service?
Topic: Three Powerful Pricing Forces: Image, Competition, and Value
AACSB: Reflective Thinking
145) Explain the impact of competition on pricing strategy and what an entrepreneur should do
about competitors’ prices.
Topic: Three Powerful Pricing Forces: Image, Competition, and Value
AACSB: Reflective Thinking
146) Retailers have three pricing techniques available to them. Describe each technique, explain
why a retailer would use it, and offer advantages or disadvantages that exist for each technique.
Topic: Pricing Techniques for Retailers
AACSB: Analytic Skills
147) What pricing strategies are available to manufacturers? Explain each, why it is used, and
what it does for the manufacturer.
Topic: Pricing Techniques for Manufacturers
AACSB: Analytic Skills
30
148) Discuss pricing strategies for service firms.
Topic: Pricing Techniques for Service Firms
149) Explain the different kinds of credit a small business can offer its customers and the impact
each has on pricing.
Topic: The Impact of Credit on Pricing
AACSB: Analytic Skills
150) What are debit cards?
Topic: The Impact of Credit on Pricing
AACSB: Analytic Skills
31