226) Reductions from list or quoted prices to buyers for performing some activity are referred to
as
A) allowances.
B) subsidies.
C) remittances.
D) noncumulative deductions.
E) list price deductions.
227) A price reduction given when a used product is part of the payment on a new product is
referred to as a
A) cash discount.
B) seasonal discount.
C) trade-in allowance.
D) promotional allowance.
E) subsidy discount.
228) A trade-in allowance is
A) a noncash exchange of one product for another of equal or greater value.
B) a cash-back payment when a more expensive item is replaced with a less expensive item.
C) the return of money based on proof of purchase.
D) a cash payment to a retailer for extra in-store support or special featuring of the brand.
E) a price reduction given when a used product is part of the payment on a new product.
229) Which of the following statements regarding a trade-in allowance is most accurate?
A) A trade-in allowance is a noncash exchange of one product for another of equal or lesser
value.
B) A trade-in allowance is an effective way to lower the price a buyer has to pay without
formally reducing the list price.
C) A trade-in allowance is a cash-back payment when a more expensive item is replaced with a
less expensive one.
D) A trade-in allowance is the return of money based on proof of purchase.
E) A trade-in allowance is a cash payment to a retailer for extra in-store support or special
featuring of the brand.
230) A new car dealer can reduce the list price of a new Ford F-150 pickup truck by offering you
a ________ of $1,000 for your 2006 Nissan Altima.
A) cash discount
B) functional discount
C) seasonal discount
D) trade-in allowance
E) promotional allowance
231) Cash payments or an extra amount of “free goods” awarded sellers in the channel for
undertaking certain advertising or selling activities to promote the product is referred to as a
A) promotional allowance.
B) promotional quantity discount.
C) seasonal discount.
D) promotional purchase inducement.
E) dynamic pricing policy.
232) A promotional allowance is
A) a onetime discount to promote the product that must be used within a certain time frame.
B) the cash payments or an extra amount of “free goods” awarded sellers in the marketing
channel for undertaking certain advertising or selling activities to promote the product.
C) the return of money to promote the product based on proof of purchase.
D) a short-term price reduction when consumer demand takes a significant and unexpected dip.
E) an incentive, such as trips, cruises, jewelry, etc., presented to brand-loyal customers.
233) The practice of replacing promotional allowances with lower manufacturer list prices is
referred to as
A) everyday low pricing.
B) everyday fair pricing.
C) trade-in allowances.
D) markdown pricing.
E) everyday value pricing.
234) Everyday low pricing refers to
A) the pricing strategy of “extreme value” stores to maintain high price-quality images for the
products they sell.
B) the pricing strategy of starting a product at standard list price and then lowering the price by a
certain percentage until it is sold.
C) short-term price reductions when consumer demand takes a significant and unexpected dip.
D) the practice of replacing promotional allowances with lower manufacturer list prices.
E) a form of predatory pricing used solely for the purpose of undercutting competitors’ prices.
235) The acronym EDLP stands for
A) estimated discount leveling policy.
B) extended discounts for loss-leader products.
C) everyday low pricing.
D) either (free) delivery or lower prices.
E) extended discounts in lieu of lower pricing.
236) Instead of everyday low prices (EDLP), supermarkets prefer a(n) ________ approach,
which is based on frequent specials where prices are temporarily lowered for a brief period of
time and then raised again.
A) Lo-Hi pricing
B) alternative pricing
C) Hi-Lo pricing
D) bundle-pricing
E) dynamic pricing policy
237) After offering a promotional allowance, the price of a product returns to its regular price
level. When this happens, the retail store’s gross margin on that product ________ on those items
that were bought with the allowance but not sold during the price special promotion.
A) decreases substantially
B) increases substantially
C) remains the same
D) fluctuates wildly
E) vanishes
238) Which of the following statements about everyday low pricing (EDLP) is most accurate?
A) EDLP encourages manufacturer allowances.
B) Supermarkets have hailed EDLP as the most effective form of value pricing.
C) Some argue that EDLP without price specials is boring for many grocery shoppers.
D) EDLP allows supermarkets to use deeply discounted price specials.
E) EDLP can increase average retail prices by as much as 10 percent.
239) Geographic adjustments are made by manufacturers or wholesalers to cover
A) production costs.
B) administrative costs.
C) selling costs.
D) promotional costs.
E) transportation costs.
240) Manufacturers or even wholesalers make geographical adjustments to list or quoted prices
to reflect
A) warehouse inventory carrying and loading costs.
B) the cost of transportation of the products from seller to buyer.
C) changes in price due to tariffs the Federal Trade Commission imposes on the transport of
goods from the United States.
D) changes in price due to fuel excise taxes on inefficient diesel trucks.
E) the need some firms have of recouping the costs of developing different versions of their
products for different global markets.
241) The two general methods for quoting prices related to transportation costs are FOB origin
pricing and
A) uniform delivered pricing.
B) mode of transportation pricing.
C) regional pricing.
D) flexible pricing.
E) FOB destination pricing.
242) The acronym FOB stands for
A) freight on board.
B) free on board.
C) freight of buyer.
D) forward onto buyer.
E) freight owner bonus.
243) What is free to the seller in FOB origin pricing?
A) customer invoicing
B) insurance against product liability
C) any method of transportation
D) cost of loading the product onto the vehicle used to transport it
E) all shipping and handling
244) Free on board (FOB) origin pricing is
A) a method of pricing where the price the seller sets includes all transportation costs.
B) a method of pricing where taxes and tariffs are adjusted based upon the city, state, or country
of origin of a product and not its destination.
C) the price the seller quotes that includes only the cost of loading the product onto or into a
vehicle and where the loading is to occur.
D) a method of pricing where taxes and tariffs are adjusted based upon the city, state, or country
destination of a product and not its place of origin.
E) the buyer’s naming the location of this loading as the seller’s factory or warehouse.
245) A method of pricing where the price the seller quotes includes only the cost of loading the
product onto the vehicle and specifies the name of the location where the loading is to occur is
referred to as
A) free on board (FOB) origin pricing.
B) free on board (FOB) destination pricing.
C) mode of transportation pricing.
D) uniform delivered pricing.
E) free on board (FOB) geographical pricing.
246) Central Ice Machine Co. is located in Omaha, Nebraska, and sells Frick, Sullair, York, and
Fes Fuller ammonia refrigeration parts. The company ships these parts using FOB origin pricing.
Which of the following statements about the shipment of a Frick reciprocating compressor is
most accurate?
A) Central Ice Machine will pay all shipping costs.
B) Central Ice Machine splits the shipping costs with its customers regardless of where the
compressor is shipped.
C) It will cost Central Ice Machine more to ship to Charlotte, North Carolina, than to Topeka,
Kansas.
D) A buyer in Albany, New York, will pay significantly more shipping charges than a buyer in
Lincoln, Nebraska.
E) All buyers will pay the same shipping costs, regardless of the destination.
247) The fashion buyer for Neiman Marcus is in Italy to view the new collections and to order
for the coming season. In Milan, she negotiates a good price for a quantity of shoes in a range of
sizes and styles, FOB factory. This means that
A) the factory selects the mode of transportation, pays the freight charges, and is responsible for
any damage because the seller retains title to the goods until they are delivered to Neiman
Marcus.
B) Neiman Marcus selects the mode of transportation, pays freight charges, and is responsible
for any damage while the shoes are in transit because title passes to the firm at the point of
loading.
C) Neiman Marcus and the factory will split the freight costs.
D) the factory pays the freight cost to a designated port (airport or seaport) in the United States
while Neiman Marcus pays the freight from that port to its final destination within the United
States.
E) the factory passes the title when the goods are loaded but will pay all shipping costs.
248) Uniform delivered pricing refers to
A) the price the seller quotes that includes all transportation costs.
B) the price the seller quotes that excludes all transportation costs.
C) the price the seller quotes that includes a fixed allowance whereby the buyer pays all
additional costs.
D) the price the seller quotes includes a fixed percentage of transportation costs for which it will
be responsible.
E) the guarantee that a retailer will be charged the same transportation fee for all its outlets
regardless of where they are located.
249) With uniform delivered pricing, the price the seller quotes
A) includes all transportation costs.
B) excludes all transportation costs.
C) includes a fixed allowance whereby the buyer pays any costs above that allowance.
D) includes a fixed percentage of transportation costs for which the seller will be responsible.
E) will guarantee that a retailer will be charged the same transportation fee for all its outlets
regardless of where they are located.
250) The price the seller quotes that includes all transportation costs is referred to as
A) inclusive transport pricing.
B) geomodal pricing.
C) uniform delivered pricing.
D) FOB origin pricing.
E) destination pricing.
251) A method of pricing where the price the seller quotes includes all transportations costs, and
the seller is responsible for any damage that may occur because the seller retains title to the
goods until delivered to the buyer, is referred to as
A) destination pricing.
B) FOB origin pricing.
C) geographical allowance.
D) uniform delivered pricing.
E) transportation allowance.
252) Many cruise lines pay the customer’s airfare to the point of cruise departure. What type of
price adjustment are the cruise lines using?
A) skimming pricing
B) promotional pricing
C) loss-leader pricing
D) prestige pricing
E) uniform delivered pricing
253) A pricing method where all buyers pay the same delivered price for the products, regardless
of their distance from the seller, is referred to as
A) single-zone pricing.
B) multiple-zone pricing.
C) freight absorption pricing.
D) FOB origin pricing.
E) basing-point pricing.
254) A company placing an order from the Lab Safety Supply catalog is instructed to add $25 to
the total cost of the order to pay for shipping regardless of the buyer’s location. Which method of
shipping does this catalog supplier use?
A) FOB origin pricing
B) multiple-zone pricing
C) freight absorption pricing
D) single-zone pricing
E) basing-point pricing
255) When a firm divides its selling territory into geographic areas, it is referred to as
A) single-zone pricing.
B) multiple-zone pricing.
C) geographic pricing.
D) FOB origin pricing.
E) basing-point pricing.
256) Multiple-zone pricing refers to
A) establishing a distribution center in each major geographical region or zone in which a firm’s
product is sold.
B) establishing retail outlets in the same vicinity as all the firm’s manufacturing plants.
C) a firm’s decision to charge the same price regardless of geographic regions or zones where it
operates.
D) a firm’s division of its selling territory into geographic areas or zones.
E) a firm’s decision to divide its business between multiple carriers to provide flexibility should
transportation prices rise with one and fall with another.
257) After extensive analysis, a mail order company has decided to embark on a policy of
multiple-zone pricing. In which step of the price-setting process would the mail order firm have
made this decision?
A) Step 6: Make special adjustments to the list or quoted price.
B) Step 4: Select an approximate price level.
C) Step 2: Estimate demand and revenue.
D) Step 1: Identify price constraints and objectives.
E) Step 5: Set list or quoted price.
258) A company in Virginia that manufactures and sells peanut brittle to retailers charges higher
shipping costs for orders sent to customers living west of the Mississippi River. This Virginia
company is using
A) single-zone pricing.
B) FOB origin pricing.
C) freight absorption pricing.
D) multiple-zone pricing.
E) basing-point pricing.
259) A pricing strategy where the buyer is allowed to deduct freight expenses from the list price
of the goods so the seller pays the transportation costs is referred to as
A) FOB factory pricing.
B) FOB absorption pricing.
C) FOB origin pricing.
D) basing-point pricing.
E) FOB with freight-allowed pricing.
260) Another name for freight-absorption pricing is
A) factory pricing.
B) FOB absorption pricing.
C) FOB with freight-allowed pricing.
D) basing-point pricing.
E) FOB origin pricing.
261) Selecting one or more geographical locations from which the list price for products plus
freight expenses are charged to the buyer is referred to as
A) FOB origin pricing.
B) basing-point pricing.
C) single-zone pricing.
D) multiple-zone pricing.
E) freight absorption pricing.
262) Basing-point pricing refers to
A) selecting a single geographical location from which the list price for products plus freight
expenses are charged to the seller.
B) selecting two or more geographical locations from which the list price for products plus
freight expenses are charged to the seller.
C) having all buyers pay the same delivered price for the products, regardless of their distance
from the seller.
D) a firm dividing a selling territory into geographic areas or zones and charging the same
delivered price to all buyers within the same zone, but charging different prices in for different
zones depending on distance from the factory or warehouse.
E) selecting one or more geographical locations from which the list price for products plus
freight expenses are charged to the buyer.
263) For which of the following products is its manufacturer most likely to use basing-point
pricing?
A) pet food
B) furniture
C) crystal glass bowls
D) coal
E) cut flowers
264) Which of the following statements about geographical adjustments to price is most
accurate?
A) In FOB origin pricing, the seller selects the mode of transportation.
B) In FOB with freight-allowed pricing, the buyer subtracts the transportation costs from the list
price.
C) Multiple-zone pricing is sometimes referred to as “spider web” pricing.
D) Basing-point pricing seems to have been used in industries where freight expenses are only a
minor part of the total cost to the buyer.
E) Geographical adjustments can be subject to government regulation if the firm cannot supply
objective data (lists of mountains, rivers, weather conditions, etc.) explaining why those
adjustments need to be made.