80) A negative aspect of selecting unit volume as a pricing objective is that
A) production often cannot 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.
81) Some firms pursue a ________ pricing objective to generate cash to ward off bankruptcy.
A) market share
B) survival
C) sales revenue
D) single product line
E) profit
82) RadioShack, an electronics retail chain, couldn’t compete with the prices offered by other
retailers. The company enacted price matching programs and promoted large discounts on its
merchandise to raise cash and hopefully stave off bankruptcy. The best pricing objective at this
point for RadioShack most likely was
A) profit.
B) market share.
C) unit volume.
D) survival.
E) social responsibility.
83) A firm may forgo a higher profit on sales and follow which of the following pricing
objectives because it wants to recognize its stakeholder obligations?
A) profit
B) market share
C) unit volume
D) survival
E) social responsibility
84) Factors that limit the range of prices a firm may set are referred to as
A) pricing restraints.
B) pricing constraints.
C) demand factors.
D) pricing barriers.
E) pricing restrictions.
85) Pricing constraints refers to
A) barriers that must be overcome in order to set pricing objectives.
B) competitive pricing advantages one firm has over another.
C) different pricing strategies for each of the firm’s products.
D) factors that limit the range of prices a firm may set.
E) barriers to entry a firm faces when launching a new product.
86) ________ are factors that limit the range of prices a firm may set.
A) Price boundary conditions
B) Pricing constraints
C) Price elasticities
D) Pricing demands
E) Pricing margins
87) All of the following are examples of pricing constraints except which?
A) familiarity of the product
B) competitors’ prices
C) newness of the product
D) unit volume
E) demand for the product class, product, or brand
88) Which of the following statements about consumer demand as a pricing constraint is most
accurate?
A) The price charged by competitors for similar offerings has little effect on the price a seller can
charge, usually only if there are very few potential buyers.
B) The number of potential buyers for the product affects the price a seller can charge, but only
if the product is using a push strategy in the channel.
C) The number of potential buyers for the product affects the price a seller can charge, but only
if the product is a necessity item.
D) The number of potential buyers for the brand affects the price a seller can charge in the
growth stage of a product life cycle, but not in the introductory stage.
E) The number of potential buyers generally affects the price a seller can charge.
89) Which of the following statements regarding pricing constraints is most accurate?
A) Generally, the greater the demand for a product, the higher the price that can be set.
B) At the corporate level, when setting pricing constraints, a firm must disregard current
conditions in the marketplace because they are too temporal for long-term planning.
C) Pricing constraints must always be set, but they are rarely enforced.
D) It is possible to create pricing constraints with the greatest range possible in order to
anticipate any and all changes in the marketing environment.
E) Even if a firm is trying to satisfy its obligations to its customers and society in general, it
should ignore setting pricing constraints.
90) The newer a product and the earlier it is in its life cycle,
A) the lower the price the firm must charge.
B) the more competition it has.
C) the higher is the price that can usually be charged.
D) the lower its production costs are.
E) the lower its unit variable cost is.
91) Which of the following statements about the product life cycle as a pricing constraint is most
accurate?
A) The newer a product is, the higher the price that can usually be charged.
B) The later in the product life cycle a product is, the higher the price that can usually be
charged.
C) Once a product is considered nostalgic, the price will continue to rise indefinitely.
D) Fads will generally have only two price points—high and low—but the values of those price
points usually will be within 10 percent of each other.
E) Prices should not be changed until a product reaches its maturity stage.
92) Which of the following statements regarding pricing constraints is most accurate?
A) When a product is in the introductory stage of the product life cycle, the initial price must be
low since consumers still don’t know what the product can really do.
B) Patents and limited competition earlier the product life cycle mean that higher prices can
usually be charged.
C) The greater the number of products in a company’s product line, the less the product features
of similar products can affect price.
D) The newest addition to a company’s product line should always have the highest price in
order to maintain the value of existing brands.
E) To avoid cannibalization, the newest product addition to a company’s product line should
never have a price lower than the other offerings in the line.
93) Occasionally, prices may rise later in the product’s life cycle. This is often due to
A) new competitors entering the market.
B) production economies of scale.
C) a decrease in the price of raw materials.
D) nostalgia and fad factors.
E) the type of competitive market shifts from pure monopoly to pure competition.
94) At one point, people were willing to pay hundreds of dollars on eBay for a Beanie Baby toy
that originally cost a small fraction of that. Today, those same Beanie Babies can be found at
garage sales for less than a dollar apiece. This is most likely due to
A) faulty craftsmanship in later production batches.
B) a sharp downturn in the economy.
C) the new, more nostalgic fad of bobblehead dolls.
D) too many counterfeit Beanie Babies entering the country.
E) a product becoming a fad and then losing its fad appeal.
95) Which of the following statements is most accurate?
A) Nonprofit organizations are exempt from having to cover the costs of producing and/or
marketing their products.
B) Socially responsible corporations should have the pricing constraint of covering all costs of
producing and marketing their products, but they should not price their products to earn a profit.
C) Marketers must ensure that firms in their channels of distribution make an adequate profit or
they will be cut off from their customers.
D) Price elasticity of demand makes it virtually impossible for companies to cover all their
marketing and production costs at all times.
E) Marketing and production costs are the most difficult and expensive aspect of pricing because
they draw so much capital away from other departments in the organization.
96) Which of these is true about a pair of $200 designer denim jeans?
A) The manufacturer’s labor to make them comprises the largest percentage of the final price,
with other channel members clamoring over a mere 10 percent.
B) Everyone gets a fair cut of the final price; the marketer will be cut off from the customer
unless all channel members are profitable.
C) The specialty retailers that sell them account for only 25 percent of the cost so that the jeans
can benefit from demand pull.
D) The final price is only this high when there is a lack of competition among cotton producers
or other suppliers.
E) The marketer of the designer denim jeans typically is not profitable for products like these.
97) Which of the following statements regarding price changes is most accurate?
A) Prices for tangible goods should change monthly, whereas service prices should change
quarterly.
B) Changing a product’s price too frequently creates antagonism among consumers, yet changing
prices too infrequently makes them feel the company is not improving its product sufficiently.
C) Supermarkets should change their prices every week since customers are expecting new
prices in the weekly flyers they receive in the mail.
D) Companies selling products over the Internet can instantly change their prices whenever the
need arises.
E) Internet price changes are regulated by the Internet Fair Practices Act to protect consumers
against price gouging.
98) Apple’s iPhone was originally a single model in a product line targeted at high-end users.
However, lower-cost rival smartphones, many of which were powered by Google’s Android
operating system, soon entered the market. In dealing with competitive offerings, Apple faces
A) the inability to change prices quickly.
B) speeding up the diffusion of innovation process.
C) brand extension confusion.
D) charging a lower price to gain a foothold in the market.
E) the challenge of pricing multiple products in an expanding product line.
99) Which of the following statements regarding the seller’s price is most accurate?
A) Internet price changes are regulated by the Internet Fair Practices Act to protect consumers
against price gouging.
B) The seller’s price is constrained by the type of market within which it competes.
C) Price changes cannot be regulated in a monopoly.
D) The type of market has little or no impact on a firm in a monopolistic competitive
environment.
E) Competitive environments should affect a firm’s pricing objectives, but not its actual product
prices.
100) Most public utilities must petition regulatory commissions in order to obtain a rate increase.
Which pricing constraint does this statement demonstrate?
A) demand for the product, class, or brand
B) newness of product in the life cycle
C) costs of production
D) type of competitive market
E) single product versus a product line
101) Economists have identified four types of competitive markets, which are
A) capitalistic, monopolistic, socialist, and communist.
B) pure monopoly, monopolistic competition, oligopoly, and pure competition.
C) free market, restrained market, government-regulated, and command economy.
D) market economy, command economy, traditional economy, and controlled economy.
E) open market, consumer-dominated market, service market, and product market.
102) Economists have identified four types of competitive markets: pure monopoly,
monopolistic competition, oligopoly, and
A) pure competition.
B) government-dominated.
C) capitalist.
D) socialist.
E) communist.
103) List the following competitive markets from most competitive to least competitive.
A) monopolistic competition, pure monopoly, pure competition, and oligopoly
B) pure competition, monopolistic competition, oligopoly, and pure monopoly
C) pure competition, monopolistic competition, pure monopoly, and oligopoly
D) oligopoly, pure competition, monopolistic competition, and pure monopoly
E) pure monopoly, pure competition, oligopoly, and monopolistic competition
104) The particular type of competition dramatically influences the range of price competition
and, in turn,
A) the nature of product differentiation and extent of advertising.
B) the nature of product differentiation and requirements for on-hand inventory.
C) the degree of involvement with each of the organization’s stakeholders.
D) the degree of involvement with both retailers and wholesalers.
E) the relationship between product lines and product classes.
105) The competitive market situation in which many sellers follow the market price for
identical, commodity products is referred to as
A) a pure monopoly.
B) an oligopoly.
C) monopolistic competition.
D) pure competition.
E) oligopolistic competition.
106) Pure competition is the competitive situation in which
A) many sellers follow market price for identical, commodity products.
B) one seller sets the price for a unique product.
C) few sellers are sensitive to one another’s prices.
D) many sellers compete on nonprice factors.
E) one or few sellers compete solely on nonprice factors.
107) If competitive market circumstances are such that there is almost no price competition, no
product differentiation, and the only advertising informs prospects that the product is available,
then the competitive market in this industry must be
A) a pure monopoly.
B) pure competition.
C) an oligopoly.
D) monopolistic competition.
E) monopolistic oligopoly.
108) The marketplace sets the price for wheat, so farmers who are trying to sell their wheat crops
do not need a pricing strategy and do just a little advertising when a crop comes in. The wheat is
sold in a(n) ________ type of competitive market.
A) oligopoly
B) pure monopoly
C) pure competition
D) monopolistic competition
E) monopolistic oligopoly
109) The competitive market situation in which many sellers compete on nonprice factors is
referred to as
A) a pure monopoly.
B) an oligopoly.
C) pure competition.
D) monopolistic competition.
E) monopolistic oligopoly.
110) In which type of industry would a marketing director be most likely to say, “We have to let
the customer know that our product is the only one that comes with its own tracking device”?
A) pure monopoly
B) oligopoly
C) pure competition
D) monopolistic oligopoly
E) monopolistic competition
111) There are more than 100 companies that manufacture natural and artificial flavorings used
to enhance the taste of food before it is sold to consumers. Some of these manufacturers
differentiate themselves from the competition in their advertising by specializing in one or two
types of foods for which they provide flavorings. Others use their distribution strategies as a
means of differentiating themselves. This industry is most likely an example of
A) pure monopoly.
B) oligopoly.
C) monopolistic competition.
D) bilateral monopoly.
E) monopolistic oligopoly.
112) Dozens of regional, private brands of peanut butter compete with national brands like
Skippy and Jif. In this type of market,
A) both price competition and nonprice competition exist.
B) these firms must maintain local customer loyalty.
C) these private brands must go head-to-head or steal market share from nationally recognized
brands.
D) these private brands must keep other regional businesses from entering the market.
E) these private brands could avoid cannibalization if they sell their product both in stores and
online.
113) 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.
114) An oligopoly is a competitive market situation in which
A) many sellers follow market price for identical, commodity products.
B) one seller sets the price for a unique product.
C) few sellers compete, and are sensitive to one another’s prices.
D) many sellers compete on nonprice factors.
E) one or few sellers compete solely on nonprice factors.
115) If competitive market circumstances are such that there are few sellers who are sensitive to
each other’s prices, and the purpose of advertising is to inform but avoid price competition, then
________ must exist in the industry.
A) a pure monopoly
B) monopolistic competition
C) pure competition
D) an oligopoly
E) oligopolistic competition
116) All of the following statements are true about an oligopolistic competitive market situation
except which?
A) The products can be differentiated or undifferentiated.
B) Advertising that uses comparative (head-to-head) messages is the norm.
C) The purpose of advertising is to inform.
D) Sellers try to avoid price competition, which can lead to price wars.
E) Firms in these markets stay aware of a competitor’s price cuts or increases and may follow
suit.
117) There are four major cereal brands—Kellogg’s, Quaker, General Mills, and Post—that seem
to occupy most of the shelf space in a typical grocery store. These cereals are all priced about the
same. There is a good deal of product differentiation, from characters to different health claims.
The cereal industry is an example of what type of competitive market?
A) a pure monopoly
B) monopolistic competition
C) pure competition
D) monopolistic oligopoly
E) an oligopoly
118) Microsoft, Sony, and Nintendo are the three principal firms in the video game console
market. How much price competition is most likely for video game makers?
A) There is almost none; the market sets the price.
B) There is vigorous competition and common price wars to drive small competitors out.
C) There is generally a price leader that sets the price.
D) Each firm is aware of each other’s prices and may adjust prices accordingly.
E) Price is set by the seller but regulated by the government.
119) The competitive market situation in which one seller sets the price for a unique product is
referred to as
A) pure monopoly.
B) oligopoly.
C) monopolistic competition.
D) pure competition.
E) monopolistic oligopoly.