212) You are president of an electric appliances manufacturer. You want to reduce your break-
even quantity. All things being equal, you can do this by
A) increasing the quantity sold, while keeping price unchanged.
B) reducing marginal revenue.
C) reducing unit variable cost.
D) increasing fixed cost.
E) increasing total cost.
213) Assuming there is no change in a product’s price or the quantity demanded, if a business
owner wants to increase her advertising expenses by $500 monthly, this would cause total costs
to ________ and the break-even quantity to
A) decrease; stay the same.
B) increase; increase.
C) decrease; increase.
D) stay the same; increase.
E) stay the same; decrease.
214) A primary reason for Washburn Guitars’ success is
A) underselling competitors by mass-producing fine-quality guitars.
B) developing product lines at different price points for different market segments.
C) offering significant price breaks to well-known performers in exchange for product
endorsements.
D) selling traditional American “rock ‘n roll” guitars in global markets.
E) setting up free music programs and donating low-price-point guitars to students in schools
that have lost their music programs due to budget constraints.
215) Washburn Guitars markets its guitars to four distinct market segments. The firm’s one-of-
kind custom instruments are targeted at
A) first-time buyers.
B) professional musicians.
C) stars and collectors.
D) large institutional buyers such as high school and collegiate band programs.
E) intermediate-skill players who may become professional musicians.
216) Washburn Guitars markets its guitars to four distinct market segments. The firm’s batch-
custom instruments are targeted at
A) first-time buyers.
B) professional musicians.
C) celebrities.
D) large institutional buyers such as band programs.
E) intermediate-skill players who may become professional musicians.
217) Washburn Guitars markets its guitars to four distinct market segments. The firm’s mass
customization instruments are targeted at
A) first-time buyers.
B) professional musicians.
C) stars and famous musicians.
D) large institutional buyers such as band programs.
E) intermediate-skill players who may become professional musicians.
218) Washburn Guitars markets its guitars to four distinct market segments. The firm’s mass-
produced instruments are targeted at
A) first-time buyers.
B) professional musicians.
C) stars and famous musicians.
D) guitar collectors and music aficionados.
E) intermediate-skill players who may become professional musicians.
219) The executive vice president of Washburn Guitars has set a sales target of 2,000 units for a
new line of guitars. This type of objective is a ________ pricing objective.
A) profit
B) target return
C) unit volume
D) market share
E) survival
220) To reduce the price sensitivity for some of its products, Washburn Guitars
A) uses multiple suppliers for its raw materials.
B) offers three months of free music lessons with the purchase of each guitar.
C) uses endorsements by internationally known musicians who play Washburn signature guitars.
D) offers a lifetime, unconditional warranty on all its instruments regardless of the price of its
guitars.
E) sponsors free music programs and special Washburn guitar camps for children.
221) Washburn Guitars recently purchased Parker Guitar, another guitar manufacturer that
designs products for professionals and collectors, and will combine the two production facilities
into a new location. Washburn expects the acquisition to reduce its rent and tax expenses by 40
percent, and the new skilled employees will reduce the hours of work needed for each unit by 15
percent. This would cause the slope of the total cost curve to ________ and the break-even
quantity to
A) decrease; stay the same.
B) decrease; increase.
C) increase; increase.
D) stay the same; increase.
E) decrease; decrease.
222) Explain the price equation in the context of a new car purchase.
223) How do consumers use price in their assessments of value?
224) What are the six major steps involved in setting prices?
225) In the process of setting price, a marketer must first identify pricing objectives and
constraints. Next, in Step 2, three specific estimates are necessary. What are they?
226) What are the six broad objectives that an organization may pursue that tie in directly to its
pricing policies?
227) Step 1 of the price-setting process identifies pricing objectives and constraints. Describe the
reasons these objectives may change and give examples of objectives a firm may set.
228) Describe a profit objective used by many Japanese manufacturing firms.
229) Describe the pricing constraints a firm is likely to face.
230) Describe the types of competitive markets and give an example of each one.
231) List four key factors used to estimate demand.
232) Factors other than price affect demand. What are they and how do they work?
233) What is the difference between a movement along a demand curve and a shift of a demand
curve?
234) Distinguish between elastic demand and inelastic demand.
235) What factors determine price elasticity of demand?
236) What is the difference between fixed costs and variable costs?
237) Marketing managers often use break-even analysis to analyze the relationship between total
revenue and total cost to determine profitability at various levels of output. What is the break-
even formula? Use the formula to calculate how many radio-controlled drones a dealer must sell
if her fixed costs are $100,000, unit variable costs are $150, and the selling price is $200.